In the recently concluded US presidential election 2024, economic problems were a driving factor for voters, resulting in Donald Trump’s return to the White House.
Now, experts have predicted that the President-elect may put more money into the pockets of the Americans through major tax code changes.
During his campaign trail, Mr Trump put major emphasis on slashing taxes on tips as well as other social security benefits, suggesting a total overhaul of income taxes with the hope of replacing the revenue with tariffs.
According to the New York Post, the extension and expansion of tax changes are high on Donald Trump’s agenda.
Among the wish-list items of the expanded tax cut program, the key focus would be on cutting down corporate tax rates. Earlier, Mr Trump had slashed the corporate tax rate from 35% to 21% in 2017. He now plans to bring it down to 15%.
“When you reduce the corporate rate by 2% wages go up 1%, corporations have more money to invest for workers,” the report quoted Grover Norquist, an activist and president of Americans for Tax Reform, as saying.
Not just that, Mr Trump has even promised his voters to reverse a provision of his 2017 tax cut package — the $10,000 cap on the famous state and local tax deductions, known as ‘SALT’.
This cap majorly targets residents of high-tax ‘blue’ states wherein the soaring state and local taxes support bloated state bureaucracies. Hence, the promise by Donald Trump to repeal this has the potential to be an early bipartisan win, the New York Post report said.
Long Island Democratic Representative Tom Suozzi, a critic of the cap, said he takes Donald Trump at his word, holding him accountable for the promise to eliminate the SALT cap.
“I will work with him and anyone to get things done on behalf of the people,” Mr Suozzi was quoted as saying.
However, insiders have suggested that this repeal can be a significantly heavier lift. “The major problem is it pits high tax states against low tax states. Phil Magness, an economic historian at the Independent Institute, said.
Noting that regions like New York, California and New Jersey have high state and local tax rates, Magness said it gives those who live there an advantage in their deductions against the ones who are residing in low-tax areas like Florida or Texas.