Tax Changes on the Horizon: What to Expect from Harris and Reeves
2017 Tax Cuts Set to Expire
Many provisions of the 2017 Tax Cuts and Jobs Act, implemented under the Trump administration, are set to expire in 2025. These provisions include individual tax cuts, estate tax exemptions, and business deductions.
Harris' Tax Stance
Vice President Harris has expressed support for more aggressive tax increases than President Biden. She has proposed raising taxes on corporations and high-income earners to fund social programs.
Potential Corporate Tax Increase
Harris has proposed raising the corporate tax rate from 21% to 28%. This would reverse the reduction enacted under the 2017 Tax Cuts and Jobs Act.
Wealth Tax
Harris has also suggested implementing a wealth tax on individuals with net worth exceeding $50 million. This tax would be levied annually and would target the accumulation of wealth by the wealthiest Americans.
Reeves' Tax Pledge
During her election campaign, UK Prime Minister Liz Truss promised not to increase three major taxes: national insurance, income tax, and VAT (value-added tax).
Potential Tax Cut Rollback
There has been speculation that Truss may consider increasing taxes on corporations or high-income earners to balance the budget. However, she has not explicitly stated her intentions in this regard.
Long-Term Tax Implications
The full extent of the tax changes that may come under Harris and Reeves is unclear. Both leaders have indicated a willingness to adjust tax policies to meet their respective goals.
Taxpayers should stay informed about potential changes and consult with tax professionals to plan accordingly.
Economic Considerations
Tax policy changes can have significant economic implications. Tax increases can reduce consumer spending and investment, while tax cuts can stimulate economic growth.
Revenue Impact
Fully extending the individual, estate, and business provisions of the 2017 Tax Cuts and Jobs Act would reduce federal tax revenues by over $4 trillion on a conventional basis.
Tax Code Simplification
Experts recommend simplifying the tax code to make it easier for taxpayers to understand and for the IRS to administer efficiently.
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