Repeal & Replacement of Trump Era Tax Laws Coming Soon?

• Author: Jeffrey Simmons
• Posted: 2024-09-24

One of former President Trump's campaign promises was that he would not only repeal the affordable care act, aka Obamacare but that he would also replace it with a plan that worked for everyone. In 2017, that campaign promise began to fall apart when Senate Republicans and Democrats struck down the vote to repeal the act. Although Democrats prompted the notion that the affordable care act was too popular to be repealed, much of the reason it did not pass was that former President Trump nor Congressional Republicans had a real plan to replace Obamacare.

Repeal & Replace Trump Tax Laws

As one of former President Trump's failures as president, President Biden is seeking to avoid going down the same path. This is because today, President Biden is formulating a way to repeal and replace the 2017 Tax Cuts and Jobs Act. In this case, however, President Biden actually has two advantages going for him. One includes having an actual plan ready to put in place if the tax cuts are repeal by congress and enjoying a Democratic majority in both the house and senate.

The Biden Tax Plan Replacment

Although many are still attempting to collect more information above the Biden tax plan, the main component of it is going to deal with increasing the corporate tax rate to historical levels. Much of the funds collected from these taxes will go towards paying for two very important plans for the Biden administration. The first one includes the stimulus bill that passed a few months ago and potentially a future bill. The second includes Biden's infrastructure program, also known as the "American Jobs Plan". However, President Biden is not expecting to stop there with the increases in taxes. He is expected to announce a tax hike on some of the wealthiest Americans. This money will be used to fund a number of social programs as well as the "American Family Plan". Of course, Republicans, as well as a few Democrats, are fighting against these tax hikes calling them job-killing government overreach.

Issues with Increasing the Corporate Tax

At the time that former President Trump introduced the 2017 Tax Cuts and Jobs Act, the corporate tax rate was already considered very high (35%). The act would bring it down to 21% in hopes of attracting businesses back to the United States. Proponents of the act pointed towards a bump in economic growth in 2018 as proof that decreasing the corporate tax rate is the right way to go. However, Democrats counter by showing that the 3% of 2018 increase was a tick lower than the 3.1% that was seen in 2015 when the corporate tax rate was at 35%. When looking at the annual growth rate in employment, job growth actually slowed down despite companies being able to keep more of their revenue.

What Percentage Does Congress Want?

At the time that former President Trump lowered the corporate tax rate to 21%, even his chief economic adviser, Gary Cohn, commented on how it would have been better to at least cap it at 28%. That alone would be able to bring in over $73 billion per year for the next ten years. Today, Congressional Democrats are not likely to accept Cohn's number of 28% and are likely to hover around the 25% mark instead.

Tax Hikes on Americans

Another campaign promised that President Biden is moving forward with is higher taxes on Americans who are earning more than $400,000 in income. In any other year, this would not likely be able to pass through congress; however, the wealthy have seen record earnings during the coronavirus pandemic. This alone has made it a very popular decision amongst the middle class, who were financially devastated during the pandemic.

Picking up the Pieces

If congressional Democrats are able to pass most of the provisions that they are proposing, Republicans will be left picking up the pieces of the Trump-era tax laws. However, they can still take credit for a few of the items that may be leftover. One of those includes being able to lower the corporate tax rate as well as slightly lowering taxes for middle-class families.