As the dust settles after the 2024 election, tax policy emerges as a hot topic. Both major political parties—Democrats and Republicans—laid out their visions for the future. Let’s break down their ideas and explore how they can impact everyday Americans.
The Democrats' Blueprint
1. Corporate Taxes
President Biden wants to raise the corporate tax rate from 21% to 28% next year. This would mean businesses gotta pay more in taxes. The idea is to get more money for the government and help even things out for everyone. Some folks say this will hurt businesses, but others think it's needed to pay for stuff like social programs.
2. Capital Gains and Dividends
Biden's plan targets capital gains and dividends. Taxpayers with income in excess of $1 million will be taxed at regular income on long-term capital gains and qualified dividends. In addition, he would face taxes on the $5 million withdrawal of unrealized capital gains upon death. The goal? Making sure the richest contribute their fair share.
3. Tax Credits and Deductions
The Child Tax Credit would become fully refundable on a permanent basis, providing much-needed relief for families. Young children would receive an increased credit of $3,600, while older children would get $3,000. These changes, though temporary, aim to alleviate financial strain.
The Republicans' Counterproposal
1. Tariffs and Exemptions
Former President Trump's camp has floated the idea of replacing income taxes with tariffs. While this might simplify the tax system, it raises concerns about international trade relations. Trump also proposes exempting tips from income taxes—a move that could benefit service industry workers.
2. Steel, Aluminum, and Green Energy
On the trade front, Trump suggests maintaining current Section 301 tariffs while raising tariffs on an additional $18 billion worth of steel, aluminum, and green energy and medical goods. The goal is to protect domestic industries and jobs.
A Personal Perspective
As a small business owner, I've grappled with the impact of tax policies. While higher corporate taxes might strain my bottom line, I appreciate the focus on fairness and social welfare. On the other hand, tariff-based systems could disrupt global supply chains, affecting my business's operations.