Tax Cuts Are Here to Stay—And So Are Exploding Budget Deficits

livemint.com:

WASHINGTON—President Biden and Republicans are gearing up for a hyperbolic election-year battle over extending the 2017 law that lowered taxes for individuals and businesses. Ignore the noise. Most of the fight is already over, and tax cuts are winning again.

The core individual tax provisions of the 2017 law, which Republicans pushed through Congress and then-president Donald Trump signed, are scheduled to expire after 2025. That means lawmakers will have to revisit the tax cuts shortly after the election, no matter who wins control of Congress and the White House. Biden calls the law an expensive failure and an unjustified giveaway to the wealthy, while Republicans promise to extend all of the tax cuts, which they see as an unqualified economic success.

The reality: Even if Biden is re-elected, most of the 2017 law isn’t going away. In his budget, Biden has already proposed extending Trump’s tax cuts for almost all households, and he has promised to avoid raising taxes on anyone making under $400,000. If Democrats hold to that pledge, it largely rules out rethinking provisions that account for about two-thirds of the 2017 law’s cost, such as lower personal rates for almost everyone and the expanded standard deduction.

And while Biden proposes sharp tax increases on roughly the top 2% of American income-earners, it is doubtful he could achieve much of that even if Democrats control Congress. They fully controlled the government in 2021 and 2022 but couldn’t raise taxes on the rich due to resistance within their own ranks. This all attests to a rarely appreciated but significant dynamic: Just as both parties agree that Social Security and Medicare, the two biggest federal spending programs, must not be touched, they also