May 23, 2024 • 16 mins
Trump’s 2017 tax cuts were 30 years in the making. Some expire next year, and a nasty battle is brewing over whether to renew them.
On today’s Big Take podcast, Bloomberg politics editor Laura Davison and Bipartisan Policy Center senior vice president Bill Hoagland join DC host Saleha Mohsin to break down the 2017 tax cuts, what they’ve meant for taxpayers and the US economy, and how a Biden or Trump win could affect their future.
Read more: Ultra-Rich Should Pay to Save Social Security, Swing-State Voter Poll Shows
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Episode Transcript
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Speaker 1 (00:03):
Bloomberg Audio Studios, podcasts, radio News.
Speaker 2 (00:09):
In twenty seventeen, President Donald Trump passed historic tax cuts.
They had two main parts, corporate and individual. The corporate side,
which let big businesses pay less to the irs, that
was all permanent, but the personal tax cuts those have
a taking time around them.
Speaker 1 (00:26):
If Congress does not act, all of the personal side
tax cuts expire in the next year and a half.
Speaker 2 (00:32):
That's Bloomberg Politics editor and tax policy expert Laura Davison
as we barrel towards November's election. Which party takes the
White House in Congress will have a big impact on
your taxes.
Speaker 1 (00:43):
The political issue here is that then you will have
big corporations paying a drastically lower rate than smaller businesses,
as well as individual households will also face a relatively
small but still a tax hike as well. So that's
going to be the political pressure on both sides going
into twenty twenty five.
Speaker 2 (01:04):
Today on the show, we dig into the twenty seventeen
tax cut that's about to be up for debate again.
I speak with Laura and with Bill Hoaglan from the
Bipartisan Policy Center about the nuts and bolts of this
law and what a second Biden or Trump administration would
mean for taxpayer's wallets and the broader economy. From Bloomberg's
(01:24):
Washington Bureau. This is the Big Take DC podcast. I'm
your host Sleiah Mosen. Back in twenty seventeen, Donald Trump
announced a pretty big new tax proposal.
Speaker 3 (01:38):
At the heart of our plan is a tax cut
for everyday working Americans.
Speaker 2 (01:44):
The Tax Cuts and Jobs Act.
Speaker 3 (01:46):
Our tax plan will ensure that companies stay in America,
grow in America, and hire in America.
Speaker 2 (01:55):
Laura Davison and I are recovering the Trump administration at
the time. She's an expert when it comes to wonky
tax policies, so I asked her to walk me through
Trump's big tax bill.
Speaker 1 (02:06):
The twenty seventeen tax cuts were basically a goal that
Republicans in Congress have had for years, and finally when
Trump got elected, they had a Republican trifecta. They had
majorities in the House, Senate, Trump and the White House
and said, Okay, this is our moment to push through
a big tax cut, sort of in the style of
what Reagan did in the eighties.
Speaker 4 (02:25):
We presented a complete program of reduction in tax rates.
Speaker 2 (02:28):
Here's President Ronald Reagan in the summer of nineteen eighty one.
Speaker 4 (02:32):
Again, our purpose was to provide incentive for the individual,
incentives for business, to encourage production and hiring of the unemployed,
and to free up money for investment.
Speaker 2 (02:43):
Reagan cut personal taxes, the amount you pay on your
income each April, across the board, by twenty five percent.
He fundamentally changed the tax code, especially as it related
to the highest income earners.
Speaker 1 (02:57):
Essentially thirty years later, the tax code hadn't been substantially
updated since then. Like, okay, we want to overhaul a
lot of how taxes are paid. And so the two
big goals they had were to reform corporate taxation and
then to make a tax cut politically popular to get
people behind it. They were like, look, we need to
do some things that really resonate with voters.
Speaker 2 (03:17):
Let's break that down First. Trump and fellow Republicans wanted
to tackle corporate taxes. Trump's plan brought that rate down
from thirty five percent to twenty one.
Speaker 1 (03:27):
They also wanted to change the way that US multinational companies,
companies that operate globally pay their taxes. Like what companies
we're talking about, Procter and Gamble, Coca Cola, you know,
all of the tech companies, Apple, Google, Facebook, They have
money that they're earning all over the world.
Speaker 2 (03:44):
That meant their tax payments were complicated, and they took
advantage of that.
Speaker 1 (03:48):
They were playing a lot of games. You know, they
were able to like book money in countries that had
a lot lower tax rate and not pay US income taxes.
Speaker 2 (03:55):
The Trump administration wanted to incentivize these huge multinational companies
to keep their business in America, to not gain the
system by keeping their business in other countries with lower
tax rates.
Speaker 1 (04:06):
They basically said, for every big company that has money offshore,
we want to charge a one time tax and then
that money can continue to grow and you can use
that in your offshore subsidiaries tax free going forward. But
they also said, when you earn income in the US,
you pay US income rates, and then when you earn
money offshore, you pay a lower rate. Essentially, the idea
(04:26):
was to bring the IP back to the US, bring
the headquarters back to the US, and still have the
US be the main hub there. So a lower tax
rate in the US was a key goal for that.
Speaker 2 (04:36):
But that lower tax rate only applied to large corporations,
the pfizers and apples of the country. Other American businesses
like your local bookstore or mom and pop grosser. They
wouldn't benefit because most small businesses don't file their taxes
as corporations. They file business taxes on their owner's personal
tax returns. Before Trump's twenty seventeen bill, that didn't matter
(04:59):
so much because the top corporate tax rate was thirty
five percent and the top individual rate was thirty nine percent.
Speaker 1 (05:06):
So they were really close.
Speaker 2 (05:08):
Now, corporations would be paying only twenty one percent, but
individuals and small businesses could still pay up to thirty
nine percent. That's a huge gap. So lawmakers added another
key provision to the tax bill, letting small business owners
deduct twenty percent from their personal tax payments.
Speaker 1 (05:26):
So small businesses basically got one fifth that their their
earnings tax free.
Speaker 2 (05:31):
Let's recap. Multinational corporations got a major tax break, and
it incentivized offshore companies to keep their business based in
the US, and small businesses could write off a fifth
of their earnings. But there's another side of the twenty
seventeen tax bill. The part meant to get most Americans
behind it, cutting the amount individuals have to pay when
(05:51):
they file their taxes each year. The bill expanded tax
credits for families with more kids.
Speaker 1 (05:57):
Another thing that ended up being quite politically difficult was
what they did to the State and local tax deduction,
which is called SALT and this was a tax break
that says that basically, anything you pay to a local
jurisdiction or a state, you can deduct that from your
federal tax bill as well, so you're not paying taxes
twice on the same income.
Speaker 2 (06:16):
When the bill came up for vote, Congress pretty much
voted along party lines. Not a single Democrat supported it,
but with Republicans in control of Congress and the White House,
it passed in December of twenty seventeen. Trump touted the
win at a rally in Florida.
Speaker 3 (06:31):
I can think of no better Christmas present for the
American people than giving you a massive tax cut. That's
what's happening.
Speaker 2 (06:40):
But tax cuts are not free.
Speaker 1 (06:42):
So the bill cost about one point five trillion dollars,
which is a pretty massive sum. But they were able
to include in this legislation a lot of what they
call pay for is things that offset the cost.
Speaker 2 (06:54):
Plus. Advocates argue these tax cuts would boost the economy.
Speaker 1 (06:58):
The idea here is that that would stimulate economic growth
when you provide a simpler and lower tax rate for businesses,
that then they would invest more in workers, invest more
in equipment. There were certain tax provisions that encourage businesses
to buy more computers, trucks, factory materials, things like that
to increase productivity.
Speaker 2 (07:16):
You can hear Trump making a very similar argument to
the one Reagan pioneered in the eighties at an event
for the Conservative Heritage Foundation in October of twenty seventeen.
Speaker 3 (07:25):
My Council of Economic Advisors estimates that this change, along
with a lower business tax rate, would likely give the
typical American household around a four thousand dollars pay raise,
and that's money that'll be spent in ourica.
Speaker 1 (07:44):
We saw some of that, but we didn't see the
level that the Trump administration and the Trump Treasury at
the time projected would happen. They threw out some numbers
there would be, you know, billions and billions, or as
much as a trillion dollar of offshore cash coming back
into the US. That didn't happen. They projected that their be
an average of four thousand dollars tax cut per household.
That also didn't happen. That they would see their earnings
(08:05):
go up by four thousand dollars. That was also not accurate.
Speaker 2 (08:08):
It's hard to assess just how these tax cuts measured
up to their projections because they went into effect in
twenty eighteen. Two years later COVID hit and appended the
entire economy.
Speaker 1 (08:18):
So the scorecard on how well this performed is really murky,
though by kind of every major scorekeeper who's looked at this,
the Congressional Budget Office, the Joint Committee on Taxation, several
outside things tanks. The tax cuts did not pay for
themselves in an increased economic output. That is pretty clear
across the board.
Speaker 2 (08:35):
And extending these tax cuts would only further add to
the country's spiraling debts. Coming up, we get into that
and what Trump and Biden want to do about the
individual tax cuts that are up for debate next year.
(08:58):
To understand what's at stake from Americans and the tax
read debate ahead, I sat down with Bill Hogland. He's
senior vice president at the Bipartisan Policy Center. He came
to the think tank after over thirty years on Capitol Hill,
including time as an advisor to former Republican Senate Majority
Leader Bill Frist, He says he's seen great examples of
(09:18):
bipartisan compromise over the years, and he thinks this tax
bill could just be that kind of opportunity.
Speaker 5 (09:24):
I think there is bipartisan support for many elements of
the tax cut, particularly as it relates to the individual
tax cuts.
Speaker 2 (09:32):
But he told me there's also bipartisan concern about the
country's rising debt and deficit.
Speaker 5 (09:37):
And therefore the politics of this are that you're not
going to be able to easily extend these tax cuts,
which some people would say another ten years would be
a seven trillion dollar hit to the deficit unless you
offset that. You don't offset those kinds of tax cuts
unless you're looking at some major spending reductions. So unless
(10:02):
it's a clean sweepe for Republicans House, Senate and the
White House, this is not going to be as smooth sailing.
Speaker 2 (10:13):
Not that either party has proven their committed to real
action on the nation's debt pile. In the past sixteen
years under Presidents Obama, Trump, and Biden, the federal debt
has more than tripled to thirty four trillion, But they
are concerned with these expiring tax laws. So break it
down for me. If Trump is elected, what has he
said about what he would do on tax policy, and
(10:34):
what do we know about what his campaign is thinking.
Speaker 1 (10:36):
Trump is easier to describe, partly because he hasn't said
all that much specifically.
Speaker 2 (10:41):
Bloomberg's Laura Davison.
Speaker 1 (10:42):
Again, he talks about taxes a lot when he's on
the campaign trail.
Speaker 3 (10:46):
You're going to have the biggest tax cut.
Speaker 1 (10:48):
At a rally in New Jersey, which is notably a
very high tax place. A couple of weeks ago, he
said that he was going to pass a middle class,
upper class, lower class and business class tax cuts.
Speaker 3 (10:57):
Do you're suffering under some of the highest property taxes
and sales taxes in the nation.
Speaker 1 (11:04):
But he hasn't gotten down to the policy specifics of
what this looks like. He's been meeting with a lot
of folks who have advised him previously on taxes, and
they've been pitching him on some ideas on going further
than just renewing the tax cuts, you know, having bigger
cuts than what he did in twenty seventeen. But his
campaign hasn't endorsed any of these ideas. I should be
very clear that they're still thinking yes tax cuts, but
(11:27):
publicly they have not gotten into the details about what
this looks like.
Speaker 2 (11:30):
I asked Laura what part of Washington is most important
for Republicans to clinch if they want to see those
tax cuts extended.
Speaker 1 (11:37):
The White House is probably the most determinative factor, because
I'll say that most people are expecting control of Washington
to be divided, and whether that means Biden or Trump
on the white House. People are sort of anticipating that
the House will go to the Democrats and Republicans will
have the Senate. And the big wild card on how
this debate goes is whether it's Biden or it's Trump.
(12:01):
Biden is almost totally on the other end of the spectrum.
He has a multi hundred page plan on what he
would do for tax cuts. Part of this is the
advantage of being the incumbent is that you have the
Congressional Budget Office, and omb when he put out his
budget proposal earlier this year, he has a full tax plan.
It broadly looks like two things have won. Raising taxes
(12:22):
on corporation, both raising the corporate rate from that twenty
one level to twenty eight percent, as well as making
sure that companies operating offshore are paying a higher tax rate.
And then on the individual side, Biden has said he
wants to keep all of the tax cuts, including the
Trump tax cuts, in place for people making under four
hundred thousand dollars, but then having people above that amount
(12:43):
pay more.
Speaker 2 (12:44):
Because when it came down to the individual side of
the twenty seventeen tax law, it was the highest orders
who benefited the most.
Speaker 1 (12:51):
And that's a lot because of this pass through deduction
that I talked about. So people who owned small businesses
both got the individual rate cuts, but also got a
much bigger tax cut on their business income.
Speaker 2 (13:01):
At a campaign event in Scranton, Pennsylvania, and April, Biden
hammered home the difference between his and Trump's approaches to
the issue of high earners, comparing what he called his
Scranton values to Trump's Mara Lago values.
Speaker 6 (13:14):
For more than forty years, our Republican friends have promised
the best way to grow the eccounters from the top down.
But here's what they don't tell you. It's never worked.
The benefits don't trickle down. The very wealthy paid lesson taxes,
and we have to borrow more and invest liss.
Speaker 2 (13:31):
Biden is proposing measures like increasing the tax rate on
the money you make off of investments called capital gains,
getting rid of that passed through deduction, and creating a
so called billionaire's tax.
Speaker 1 (13:44):
This concept of taxing the really really wealthy is wildly
popular with both sides of the aisle.
Speaker 2 (13:49):
In fact, a recent Bloomberg News Morning Consult poll found
that seventy seven percent of Swing state voters supported a
billionaire's tax to make up for Social Security shortfif.
Speaker 1 (14:00):
Seventy seven percent of people in the US don't agree
on anything.
Speaker 2 (14:02):
In spite of this, our most recent poll found that
Morris Wing state voters trust Trump on taxes over Biden.
Whoever wins the White House in November, what they decide
to do about the expiring tax cuts has huge implications
for the US economy.
Speaker 1 (14:18):
Renewing the Trump tax cuts is incredibly expensive. It costs
about one point five trillion in the first place for
both the corporate side the individual side. All of that.
To renew just the individual side for the next decade
cost four point six trillion. Basically, you know, an increase
of you know, somewhere from two to three x just
to increase a portion of them, and so that's going
to be a huge fight in Congress of you know,
(14:40):
between Republicans and Democrats. Do they add to the deficit?
Do they pay for them?
Speaker 2 (14:43):
I asked Bill Hoagman from the Bipartisan Policy Center about this.
He said that in some ways, the way we talk
and think about tax cuts as they relate to the
national debt, it's short sighted. We're all concerned about the
taxes we pay today, but if we keep letting the
debt creep up, we could be paying the price tomorrow.
Speaker 5 (15:03):
What is this debt that we became a It's a
tax on you, your generation, future generations. It is a form
of attacks. It will be paid in the future. One
way of looking at this is we don't need to
further add to the already a very high level of
debt that we're already incurred.
Speaker 2 (15:27):
Thanks for listening to The Big Take DC podcast from
Bloomberg News. I'm sali Emosen. This episode was produced by
Julia Press. It was mixed by Veronica Rodriguez and fact
checked by Audreyana Tapia. It was edited by Aaron Edwards
and Wendy Benjaminson, who provides editorial direction with Elizabeth Ponso.
The clips you heard of Reagan are courtesy of the
(15:47):
Ronald Reagan Presidential Library. Naomi Shaven and Kim Gettleson are
senior producers. Nicole Beemster Bower is our executive producer. Stage
Bauman is Bloomberg's head of podcasts. Please follow and review
The Take DC wherever you listen to podcasts. It helps
new listeners find the show
Bloomberg Audio Studios, podcasts, radio News.
Speaker 2 (00:09):
In twenty seventeen, President Donald Trump passed historic tax cuts.
They had two main parts, corporate and individual. The corporate side,
which let big businesses pay less to the irs, that
was all permanent, but the personal tax cuts those have
a taking time around them.
Speaker 1 (00:26):
If Congress does not act, all of the personal side
tax cuts expire in the next year and a half.
Speaker 2 (00:32):
That's Bloomberg Politics editor and tax policy expert Laura Davison
as we barrel towards November's election. Which party takes the
White House in Congress will have a big impact on
your taxes.
Speaker 1 (00:43):
The political issue here is that then you will have
big corporations paying a drastically lower rate than smaller businesses,
as well as individual households will also face a relatively
small but still a tax hike as well. So that's
going to be the political pressure on both sides going
into twenty twenty five.
Speaker 2 (01:04):
Today on the show, we dig into the twenty seventeen
tax cut that's about to be up for debate again.
I speak with Laura and with Bill Hoaglan from the
Bipartisan Policy Center about the nuts and bolts of this
law and what a second Biden or Trump administration would
mean for taxpayer's wallets and the broader economy. From Bloomberg's
(01:24):
Washington Bureau. This is the Big Take DC podcast. I'm
your host Sleiah Mosen. Back in twenty seventeen, Donald Trump
announced a pretty big new tax proposal.
Speaker 3 (01:38):
At the heart of our plan is a tax cut
for everyday working Americans.
Speaker 2 (01:44):
The Tax Cuts and Jobs Act.
Speaker 3 (01:46):
Our tax plan will ensure that companies stay in America,
grow in America, and hire in America.
Speaker 2 (01:55):
Laura Davison and I are recovering the Trump administration at
the time. She's an expert when it comes to wonky
tax policies, so I asked her to walk me through
Trump's big tax bill.
Speaker 1 (02:06):
The twenty seventeen tax cuts were basically a goal that
Republicans in Congress have had for years, and finally when
Trump got elected, they had a Republican trifecta. They had
majorities in the House, Senate, Trump and the White House
and said, Okay, this is our moment to push through
a big tax cut, sort of in the style of
what Reagan did in the eighties.
Speaker 4 (02:25):
We presented a complete program of reduction in tax rates.
Speaker 2 (02:28):
Here's President Ronald Reagan in the summer of nineteen eighty one.
Speaker 4 (02:32):
Again, our purpose was to provide incentive for the individual,
incentives for business, to encourage production and hiring of the unemployed,
and to free up money for investment.
Speaker 2 (02:43):
Reagan cut personal taxes, the amount you pay on your
income each April, across the board, by twenty five percent.
He fundamentally changed the tax code, especially as it related
to the highest income earners.
Speaker 1 (02:57):
Essentially thirty years later, the tax code hadn't been substantially
updated since then. Like, okay, we want to overhaul a
lot of how taxes are paid. And so the two
big goals they had were to reform corporate taxation and
then to make a tax cut politically popular to get
people behind it. They were like, look, we need to
do some things that really resonate with voters.
Speaker 2 (03:17):
Let's break that down First. Trump and fellow Republicans wanted
to tackle corporate taxes. Trump's plan brought that rate down
from thirty five percent to twenty one.
Speaker 1 (03:27):
They also wanted to change the way that US multinational companies,
companies that operate globally pay their taxes. Like what companies
we're talking about, Procter and Gamble, Coca Cola, you know,
all of the tech companies, Apple, Google, Facebook, They have
money that they're earning all over the world.
Speaker 2 (03:44):
That meant their tax payments were complicated, and they took
advantage of that.
Speaker 1 (03:48):
They were playing a lot of games. You know, they
were able to like book money in countries that had
a lot lower tax rate and not pay US income taxes.
Speaker 2 (03:55):
The Trump administration wanted to incentivize these huge multinational companies
to keep their business in America, to not gain the
system by keeping their business in other countries with lower
tax rates.
Speaker 1 (04:06):
They basically said, for every big company that has money offshore,
we want to charge a one time tax and then
that money can continue to grow and you can use
that in your offshore subsidiaries tax free going forward. But
they also said, when you earn income in the US,
you pay US income rates, and then when you earn
money offshore, you pay a lower rate. Essentially, the idea
(04:26):
was to bring the IP back to the US, bring
the headquarters back to the US, and still have the
US be the main hub there. So a lower tax
rate in the US was a key goal for that.
Speaker 2 (04:36):
But that lower tax rate only applied to large corporations,
the pfizers and apples of the country. Other American businesses
like your local bookstore or mom and pop grosser. They
wouldn't benefit because most small businesses don't file their taxes
as corporations. They file business taxes on their owner's personal
tax returns. Before Trump's twenty seventeen bill, that didn't matter
(04:59):
so much because the top corporate tax rate was thirty
five percent and the top individual rate was thirty nine percent.
Speaker 1 (05:06):
So they were really close.
Speaker 2 (05:08):
Now, corporations would be paying only twenty one percent, but
individuals and small businesses could still pay up to thirty
nine percent. That's a huge gap. So lawmakers added another
key provision to the tax bill, letting small business owners
deduct twenty percent from their personal tax payments.
Speaker 1 (05:26):
So small businesses basically got one fifth that their their
earnings tax free.
Speaker 2 (05:31):
Let's recap. Multinational corporations got a major tax break, and
it incentivized offshore companies to keep their business based in
the US, and small businesses could write off a fifth
of their earnings. But there's another side of the twenty
seventeen tax bill. The part meant to get most Americans
behind it, cutting the amount individuals have to pay when
(05:51):
they file their taxes each year. The bill expanded tax
credits for families with more kids.
Speaker 1 (05:57):
Another thing that ended up being quite politically difficult was
what they did to the State and local tax deduction,
which is called SALT and this was a tax break
that says that basically, anything you pay to a local
jurisdiction or a state, you can deduct that from your
federal tax bill as well, so you're not paying taxes
twice on the same income.
Speaker 2 (06:16):
When the bill came up for vote, Congress pretty much
voted along party lines. Not a single Democrat supported it,
but with Republicans in control of Congress and the White House,
it passed in December of twenty seventeen. Trump touted the
win at a rally in Florida.
Speaker 3 (06:31):
I can think of no better Christmas present for the
American people than giving you a massive tax cut. That's
what's happening.
Speaker 2 (06:40):
But tax cuts are not free.
Speaker 1 (06:42):
So the bill cost about one point five trillion dollars,
which is a pretty massive sum. But they were able
to include in this legislation a lot of what they
call pay for is things that offset the cost.
Speaker 2 (06:54):
Plus. Advocates argue these tax cuts would boost the economy.
Speaker 1 (06:58):
The idea here is that that would stimulate economic growth
when you provide a simpler and lower tax rate for businesses,
that then they would invest more in workers, invest more
in equipment. There were certain tax provisions that encourage businesses
to buy more computers, trucks, factory materials, things like that
to increase productivity.
Speaker 2 (07:16):
You can hear Trump making a very similar argument to
the one Reagan pioneered in the eighties at an event
for the Conservative Heritage Foundation in October of twenty seventeen.
Speaker 3 (07:25):
My Council of Economic Advisors estimates that this change, along
with a lower business tax rate, would likely give the
typical American household around a four thousand dollars pay raise,
and that's money that'll be spent in ourica.
Speaker 1 (07:44):
We saw some of that, but we didn't see the
level that the Trump administration and the Trump Treasury at
the time projected would happen. They threw out some numbers
there would be, you know, billions and billions, or as
much as a trillion dollar of offshore cash coming back
into the US. That didn't happen. They projected that their be
an average of four thousand dollars tax cut per household.
That also didn't happen. That they would see their earnings
(08:05):
go up by four thousand dollars. That was also not accurate.
Speaker 2 (08:08):
It's hard to assess just how these tax cuts measured
up to their projections because they went into effect in
twenty eighteen. Two years later COVID hit and appended the
entire economy.
Speaker 1 (08:18):
So the scorecard on how well this performed is really murky,
though by kind of every major scorekeeper who's looked at this,
the Congressional Budget Office, the Joint Committee on Taxation, several
outside things tanks. The tax cuts did not pay for
themselves in an increased economic output. That is pretty clear
across the board.
Speaker 2 (08:35):
And extending these tax cuts would only further add to
the country's spiraling debts. Coming up, we get into that
and what Trump and Biden want to do about the
individual tax cuts that are up for debate next year.
(08:58):
To understand what's at stake from Americans and the tax
read debate ahead, I sat down with Bill Hogland. He's
senior vice president at the Bipartisan Policy Center. He came
to the think tank after over thirty years on Capitol Hill,
including time as an advisor to former Republican Senate Majority
Leader Bill Frist, He says he's seen great examples of
(09:18):
bipartisan compromise over the years, and he thinks this tax
bill could just be that kind of opportunity.
Speaker 5 (09:24):
I think there is bipartisan support for many elements of
the tax cut, particularly as it relates to the individual
tax cuts.
Speaker 2 (09:32):
But he told me there's also bipartisan concern about the
country's rising debt and deficit.
Speaker 5 (09:37):
And therefore the politics of this are that you're not
going to be able to easily extend these tax cuts,
which some people would say another ten years would be
a seven trillion dollar hit to the deficit unless you
offset that. You don't offset those kinds of tax cuts
unless you're looking at some major spending reductions. So unless
(10:02):
it's a clean sweepe for Republicans House, Senate and the
White House, this is not going to be as smooth sailing.
Speaker 2 (10:13):
Not that either party has proven their committed to real
action on the nation's debt pile. In the past sixteen
years under Presidents Obama, Trump, and Biden, the federal debt
has more than tripled to thirty four trillion, But they
are concerned with these expiring tax laws. So break it
down for me. If Trump is elected, what has he
said about what he would do on tax policy, and
(10:34):
what do we know about what his campaign is thinking.
Speaker 1 (10:36):
Trump is easier to describe, partly because he hasn't said
all that much specifically.
Speaker 2 (10:41):
Bloomberg's Laura Davison.
Speaker 1 (10:42):
Again, he talks about taxes a lot when he's on
the campaign trail.
Speaker 3 (10:46):
You're going to have the biggest tax cut.
Speaker 1 (10:48):
At a rally in New Jersey, which is notably a
very high tax place. A couple of weeks ago, he
said that he was going to pass a middle class,
upper class, lower class and business class tax cuts.
Speaker 3 (10:57):
Do you're suffering under some of the highest property taxes
and sales taxes in the nation.
Speaker 1 (11:04):
But he hasn't gotten down to the policy specifics of
what this looks like. He's been meeting with a lot
of folks who have advised him previously on taxes, and
they've been pitching him on some ideas on going further
than just renewing the tax cuts, you know, having bigger
cuts than what he did in twenty seventeen. But his
campaign hasn't endorsed any of these ideas. I should be
very clear that they're still thinking yes tax cuts, but
(11:27):
publicly they have not gotten into the details about what
this looks like.
Speaker 2 (11:30):
I asked Laura what part of Washington is most important
for Republicans to clinch if they want to see those
tax cuts extended.
Speaker 1 (11:37):
The White House is probably the most determinative factor, because
I'll say that most people are expecting control of Washington
to be divided, and whether that means Biden or Trump
on the white House. People are sort of anticipating that
the House will go to the Democrats and Republicans will
have the Senate. And the big wild card on how
this debate goes is whether it's Biden or it's Trump.
(12:01):
Biden is almost totally on the other end of the spectrum.
He has a multi hundred page plan on what he
would do for tax cuts. Part of this is the
advantage of being the incumbent is that you have the
Congressional Budget Office, and omb when he put out his
budget proposal earlier this year, he has a full tax plan.
It broadly looks like two things have won. Raising taxes
(12:22):
on corporation, both raising the corporate rate from that twenty
one level to twenty eight percent, as well as making
sure that companies operating offshore are paying a higher tax rate.
And then on the individual side, Biden has said he
wants to keep all of the tax cuts, including the
Trump tax cuts, in place for people making under four
hundred thousand dollars, but then having people above that amount
(12:43):
pay more.
Speaker 2 (12:44):
Because when it came down to the individual side of
the twenty seventeen tax law, it was the highest orders
who benefited the most.
Speaker 1 (12:51):
And that's a lot because of this pass through deduction
that I talked about. So people who owned small businesses
both got the individual rate cuts, but also got a
much bigger tax cut on their business income.
Speaker 2 (13:01):
At a campaign event in Scranton, Pennsylvania, and April, Biden
hammered home the difference between his and Trump's approaches to
the issue of high earners, comparing what he called his
Scranton values to Trump's Mara Lago values.
Speaker 6 (13:14):
For more than forty years, our Republican friends have promised
the best way to grow the eccounters from the top down.
But here's what they don't tell you. It's never worked.
The benefits don't trickle down. The very wealthy paid lesson taxes,
and we have to borrow more and invest liss.
Speaker 2 (13:31):
Biden is proposing measures like increasing the tax rate on
the money you make off of investments called capital gains,
getting rid of that passed through deduction, and creating a
so called billionaire's tax.
Speaker 1 (13:44):
This concept of taxing the really really wealthy is wildly
popular with both sides of the aisle.
Speaker 2 (13:49):
In fact, a recent Bloomberg News Morning Consult poll found
that seventy seven percent of Swing state voters supported a
billionaire's tax to make up for Social Security shortfif.
Speaker 1 (14:00):
Seventy seven percent of people in the US don't agree
on anything.
Speaker 2 (14:02):
In spite of this, our most recent poll found that
Morris Wing state voters trust Trump on taxes over Biden.
Whoever wins the White House in November, what they decide
to do about the expiring tax cuts has huge implications
for the US economy.
Speaker 1 (14:18):
Renewing the Trump tax cuts is incredibly expensive. It costs
about one point five trillion in the first place for
both the corporate side the individual side. All of that.
To renew just the individual side for the next decade
cost four point six trillion. Basically, you know, an increase
of you know, somewhere from two to three x just
to increase a portion of them, and so that's going
to be a huge fight in Congress of you know,
(14:40):
between Republicans and Democrats. Do they add to the deficit?
Do they pay for them?
Speaker 2 (14:43):
I asked Bill Hoagman from the Bipartisan Policy Center about this.
He said that in some ways, the way we talk
and think about tax cuts as they relate to the
national debt, it's short sighted. We're all concerned about the
taxes we pay today, but if we keep letting the
debt creep up, we could be paying the price tomorrow.
Speaker 5 (15:03):
What is this debt that we became a It's a
tax on you, your generation, future generations. It is a form
of attacks. It will be paid in the future. One
way of looking at this is we don't need to
further add to the already a very high level of
debt that we're already incurred.
Speaker 2 (15:27):
Thanks for listening to The Big Take DC podcast from
Bloomberg News. I'm sali Emosen. This episode was produced by
Julia Press. It was mixed by Veronica Rodriguez and fact
checked by Audreyana Tapia. It was edited by Aaron Edwards
and Wendy Benjaminson, who provides editorial direction with Elizabeth Ponso.
The clips you heard of Reagan are courtesy of the
(15:47):
Ronald Reagan Presidential Library. Naomi Shaven and Kim Gettleson are
senior producers. Nicole Beemster Bower is our executive producer. Stage
Bauman is Bloomberg's head of podcasts. Please follow and review
The Take DC wherever you listen to podcasts. It helps
new listeners find the show
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