The difference between President Trump and challenger Joe Biden is evident in their tax policies.
“The Biden campaign supports higher taxes on business, particularly large corporations; stronger regulations, including on privacy and broadband providers; and more-aggressive antitrust enforcement, particularly on large Internet companies,” according to a report from the nonpartisan Information Technology & Innovation Foundation. “The Trump administration embraces a more traditional Republican approach of lighter regulations and lower business taxes, and antitrust that is grounded in the consumer welfare principle.”
President Trump’s Tax Cuts and Jobs Act (TCJA) helped boost economic growth by reducing both corporate and individual taxes. Previously, America had the highest corporate tax rate of any developed country in the world. Businesses with international operations were taxed twice — in countries where they operated and again when they repatriated money back to the United States.
Biden has said he would repeal the TCJA “on day one” because it “rewards wealth over work.” He has also said that he would impose a 12.4% Social Security payroll tax for wages above $400,000, increase the corporate income tax to 28%, establish a corporate minimum tax on book income, double the tax rate on global intangible low-taxed income (GILTI) and temporarily increase the child and dependent tax credits.
“Additionally, Biden has proposed a variety of new tax credits or expansions to existing credits to help increase after-tax incomes for low-earners,” according to the nonpartisan Tax Foundation. “Biden’s onshoring plan increases the taxation of foreign profits while providing credits to incentivize economic activity that is onshored.”
While the Biden tax plan would shrink the size of the economy by 1.47%, due to higher marginal tax rates on labor and capital, it would raise $2.65 trillion over the next decade, according to the Tax Foundation.
Increasing the child tax credit from a maximum of $3,000 to $8,000 would increase after-tax income for many taxpayers, but “by 2030 the plan would lead to lower after-tax income for all income levels,” according to the Tax Foundation.
President Trump’s tax plan is less specific, but his “Tax Cuts 2.0” would reduce the marginal tax rate on personal income for middle-class taxpayers from 24% to 15%. He has also suggested permanent cuts to the payroll tax and he acted to defer 2020 employee-side payroll taxes.
The New York Times called the deferral “more trouble than it’s worth,” as the payroll tax is used to fund Social Security.
“There is an enormous gulf between the presidential candidates on tax policy — with trillions of dollars at stake over the next decade,” according to The Wall Street Journal. “President Trump is campaigning to continue his administration’s biggest legislative achievement, the 2017 tax law, which lowered taxes on businesses and individuals while increasing budget deficits. Mr. Biden proposes big tax increases on corporations and the wealthy to pay for social programs.”