Presidential candidates are promising the world with tax policy pitches on the campaign trail, but lawmakers and former staffers are urging everyone to keep their eye on the ball: the 2025 tax cliff.
Both Vice President Kamala Harris and former President Trump have flooded the zone with expensive tax proposals leading up to November, racking up trillions in estimated costs for their plans as part of their appeal to voters, particularly in swing states.
But current lawmakers, deficit hawks, and former taxwriting committee advisers warn that taxwriters will already have a full plate addressing the expiring Tax Cuts and Jobs Act provisions at the end of next year and caution against taking the candidates’ lengthy list of new ideas seriously.
Senate Finance Committee member James Lankford, R-Okla., dismissed the myriad tax ideas being floated by the would-be presidents.
“It’s campaign season, and everybody’s making promises,” Lankford said. “It takes an act of Congress and moving it to the president to be able to get stuff done.”
Christopher J. Armstrong of Holland & Knight LLP, who worked on Republican presidential campaigns in 2008 and 2012, agreed.
“I don’t think anyone ought to be losing any sleep over the contents of a campaign outline. It’s easy to toss out ideas like this; it’s a lot harder to legislate,” said Armstrong, a former counsel for Republican chairs on the House Ways and Means and Senate Finance committees.
“Presidential campaigns always look at tax policy as if it is a magic wand and they can give everybody what they want, and that’s just not how it works,” Armstrong added. “Tax policy at this point in the political process is often all kind of like cake with no vegetables.”
Many of Trump’s tax-related pitches have also been timed to coincide with campaign stops, such as his announcement on tax-exempt tips in Nevada, changing the state and local tax deduction cap on Long Island, allowing deductibility of car loan interest in Detroit, and enhancing the tax deductibility of generators soon after hurricanes in the South.
“A lot of them, particularly from the Trump campaign, are proposals that are kind of timely and targeted to a particular audience. They’re episodic, if you will, and they are things that are appealing to voters,” said Marc Gerson, former House Ways and Means Committee tax counsel. “I just think the kind of the fiscal environment and the need to extend the 2017 provisions is just such a priority that I don’t know how Congress can accommodate more tax relief.”
As if extending the Trump tax cuts at a cost of $4.6 trillion — an estimate that doesn’t include Trump’s proposed end to the SALT deduction cap, which served as an offset in the law — weren't enough, each candidate’s ideas would carry a hefty price tag.
The Committee for a Responsible Federal Budget estimates that Harris is proposing $3.5 trillion in additional proposals, and Trump $7.5 trillion — not including his recent car loan deduction promise; his pledge to end what he called the “double taxation” of citizens living abroad; and his suggestion that he would consider exempting police, firefighters, active-duty military personnel, and veterans from federal taxation.
Both candidates have offered ideas for offsets to their plans — Trump with a proposal to impose a blanket tariff to pay for many of his initiatives and Harris proposing to increase the corporate tax rate to 28 percent and raise taxes on capital income, both realized and unrealized. But neither’s suggestions are projected to cover the full cost of their proposed cuts.
“A lot of the proposals are very expensive, or they’re not that well defined, because they’re campaign proposals. They’re not legislative proposals; there’s no legislative language,” Gerson said.
Gerson pointed out that some of the proposals also wouldn’t meet the rules for consideration in a reconciliation package, specifically naming Trump’s pitch to make Social Security payments tax exempt.
“He seems to have a new tax proposal every day,” Ways and Means ranking member Richard E. Neal, D-Mass., said. “I think that this is more about electioneering than it is about policy.”
Senate Finance Committee member Thom Tillis, R-N.C., said there is a two-step process for formulating tax policy that starts with considering a wide swath of ideas and ends with accepting what is actually feasible.
Democrats currently hold a 51-49 edge in the Senate, and Republicans are hoping to at least flip those numbers in the upcoming election.
“The way you come up with really innovative ideas is to put a lot of stuff out there, but then we have to deal with what the art of the possible is. And even if I embrace — hook, line, and sinker — every proposal that I’ve heard, the real key is the 51 [votes],” Tillis said. “I see some people really excited about one idea, and I see people not so excited about another idea. At the end of the day, all this brainstorming has to come into a baseline that we’ll get.”
Fool Me Once
Democratic taxwriters were quick to point to Trump’s track record in his first White House term as proof that his campaign trail promises are unlikely to have legs in 2025.
But Trump delivered on the across-the-board cuts he promised in the TCJA, at least initially. In the Joint Committee on Taxation’s estimate of distribution effects (JCX-60-17), every income cohort benefited from the package in 2019. But by 2021, those with lower incomes saw tax increases. If the TCJA expires, only those making more than $75,000 a year will see ongoing tax cuts, while those making less will get tax increases. The biggest percentage of tax cuts in the long term would be enjoyed by those making more than $1 million a year.
Other parts of Trump’s campaign promises fell by the wayside. At a Detroit Economic Club speech in August 2016, Trump promised “the biggest tax revolution” since former President Reagan. He described only two main features: cutting the number of individual income tax brackets from seven to three, with a top marginal rate of 33 percent, and eliminating carried interest. Trump later promised simplification to a degree that would enable most Americans to file their tax returns on a postcard and a 20 percent corporate income tax rate.
Finance Committee Chair Ron Wyden, D-Ore., said Democratic taxwriters are taking a look at Harris’s “no tax on tips” proposal, among other ideas for legislation, but criticized Trump’s pitches as ones that the former president won’t follow through on.
“Make no mistake about it: In the campaign season, Donald Trump always has all kinds of grandiose ideas to do things for working families, and then, what we saw is the second he got elected, he was all about finding ways to help his billionaire buddies,” Wyden said. “So I think you gotta recognize that there’s some history here.”
“I find it ironic that any time Vice President Harris talks about her policies, [Trump’s] response has been, ‘Why didn’t you do it?’ . . . Yet, his latest proposal is fixing a problem that he created,” Ways and Means Committee member Mike Thompson, D-Calif., said of Trump’s proposal to remove the SALT deduction cap.
“Where’s the outrage anymore?” Ways and Means member Daniel T. Kildee, D-Mich., asked, referring to Trump’s reversal on the SALT cap that he signed into law seven years ago and his threats of large tariffs on automobiles made in Mexico even though he signed the United States-Mexico-Canada Agreement four years ago.
“Trump operates on the correct assumption that people don’t follow policy and they don’t remember anything,” Kildee said.
But Kildee also admitted that the proposals are bound to be part of the 2025 TCJA expirations conversation.
“That’s an opportunity to do more than just address those specific issues, and all depending on who’s in the majority. That conversation could take lots of different forms,” Kildee said.
Tillis said that after the election, it’ll be lawmakers’ job to move the ideas from the possible to the practical.
“All these ideas are great, and I think that President Trump’s right to bring them up. We’ve got to package it, get the votes, and send it to him,” Tillis said.
Project 2025
In Congress, House Democrats did some electioneering of their own during a September 24 Democratic Steering and Policy Committee hearing, bashing Project 2025, a 900-page roadmap for the next Republican president created by the Heritage Foundation. While Trump has attempted to distance himself from the plan, Democrats have framed the proposals as the former president’s goals should he take office, citing his association with the authors of the manifesto’s tax policy section.
“Experts have dug through Project 2025, but they didn’t have to read between the lines too much to know exactly what Trump and MAGA Republicans want to do with your taxes, because it’s practically written in bold face: It will raise your taxes while cutting taxes for billionaires and big corporations,” Rep. Sean Casten, D-Ill., said at the hearing.
Casten cited a report from the Center for American Progress that estimated that cutting the corporate tax rate to 18 percent would lead to a $24 billion tax cut for Fortune 100 companies over 10 years, and that Project 2025’s proposal for just two income tax brackets would raise taxes by $3,000 a year for the median family of four, which makes about $110,000 a year.
“You may reasonably be asking, why do Trump and congressional Republicans want to raise taxes on hardworking families and hand out tax breaks to billionaires and big corporations?” Casten said. “I’ll tell you why: because he doesn’t care about you. He only cares about himself and his rich friends.”
House Democratic appropriators have also attempted to draw parallels between Project 2025 and language in the GOP’s fiscal 2025 appropriations bills, including reduced funding for the IRS.
House Speaker Mike Johnson, R-La., laid out his tax priorities for next year when he spoke October 1 at the New York Stock Exchange.
“We will introduce and pass a comprehensive economic agenda based on the successful plan we implemented under President Trump’s first administration that will restore the American economy to full health and reinvigorate our can-do spirit,” said Johnson, who anchored that agenda on tax policy.
“First, we’ll promote investment and opportunity; we’ll do it by extending and building upon the Trump tax cuts. . . . We will reinstitute a broad-based tax policy that unleashes the American entrepreneurial spirit and encourages research development in manufacturing,” Johnson said. He mentioned specific proposals from the House-passed tax package that stalled in the Senate — the Tax Relief for American Families and Workers Act of 2024 (H.R. 7024) — including full R&D expensing and bonus depreciation.
Johnson said Republicans also “plan to prioritize our nation by using the tax code to secure our border and fight the drug cartels.”
What Others Think
Next year’s tax overhaul might consume much of political Washington’s focus in 2025, but it’s not something that is consuming the public’s attention yet. Taxes were top of mind for only 1 percent of voters — ranking 13th out of 13 issues — in a recent Public Opinion Strategies online survey conducted for Americans for Prosperity.
Only 6 percent of voters say they have “heard a lot” about the TCJA’s expiring provisions, while 60 percent say they have heard “not much” or “nothing at all,” according to the survey of 1,000 registered voters.
The electioneering revolves around two dominant arguments: whether the TCJA grew the economy and paid for itself or was a bonanza to the rich but a sop to the poor.
Sen. Steve Daines, R-Mont., National Republican Senatorial Committee chair and a Finance Committee member, said tax issues are important to voters in this election because of their impact on the economy.
“What the American people want to see is a growing economy. They want to see higher wages,” Daines said at a September 25 press conference. “And there’s a very clear correlation between what we did with these tax cuts back in ‘17, with higher wages and economic growth. That’s what we all want to see. That’s why I think this is a very important election issue for 2024.”
Corporate suite executives worry about both candidates, though for different reasons. Seventy-five percent agreed or strongly agreed that an increase in the corporate income tax rate to 28 percent, as proposed by Harris, would lead them to significantly reduce investments in the United States, according to a PwC survey of 709 executives conducted September 12-19.
Similarly, 75 percent agreed or strongly agreed that a 10 percent tariff on imports, as proposed by Trump, would significantly hinder the growth of their companies.