2024 election insights: Comparing tax policy platforms

The results of the upcoming election will have a substantial impact on the future of tax policy. Given tax policy’s influence on the economy and the magnitude of the potential Tax Cuts and Jobs Act (TCJA) of 2017 expirations, a comparison of party platforms offers valuable insights into the possible post-election landscape.

Presented below is a broader focus on party tax policy platforms rather than the individual plans of presidential candidates. While presidential budgets and tax proposals often influence legislation, only Congress has the authority to enact it. Financial measures originate in the House of Representatives and may be altered by the Senate. Identical bills must pass both chambers before the president can sign a bill into law; accordingly, tax legislation is often driven by lawmakers’ priorities. However, presidential platforms are briefly discussed at the end of this section.

Jump to:

• Business tax
• Individual tax
• Trust, estate and gift tax
• International tax
• Other items
• Presidential platforms

The positions discussed below are the generally supported tax policy proposals by party; though, in both groups there may be lawmakers who disagree with and/or support a different version of a proposal. Republicans and Democrats have recently begun organizing and strategizing around the 2025 fiscal cliff and are in the process of developing more comprehensive plans. Ways and Means Republicans, led by Smith, have formed “tax team” working groups and are seeking taxpayer comments on the impact of the potential 2025 expirations, which can be submitted on the Ways and Means portal. Meanwhile, Senate Democrats, led by Wyden, have begun meeting and are developing a “revenue menu” of ideas and priorities.

Business tax

The largest difference in the Republican and Democratic business tax policy platform is the proposed corporate tax rate. Republicans would like to maintain or even decrease the current 21% corporate rate, while Democrats would like to see an increase to 28%, which is still well below the pre-TCJA 35% rate. Though they are not listed in the chart below, some Democrats have supported other business revenue raisers, such as an increase to the 1% stock buyback tax rate, an increase to the 15% corporate alternative minimum tax rate, limitations on the deductibility of executive compensation, etc.

There are several areas of consensus among Democrats and Republicans, including reform for the deductibility of business interest expense and domestic research and experimental expenditures. These were highlighted in the bipartisan tax bill, which received overwhelming support in the House but failed to advance in the Senate, where Crapo opposed the bill due to the Child Tax Credit (CTC) provisions.

Individual tax

Most of the TCJA’s expiring provisions impact individual taxpayers.

Republicans would like to make all of the expiring individual provisions permanent. However, the cost associated with a full extension is substantial – of the Congressional Budget Office’s (CBO) $4.6 trillion estimate presented earlier, $3.7 trillion is attributable to the TCJA’s individual provisions. It may be difficult for Republicans to find “pay-fors” to cover some or all of the cost of extension.

In recent months, Harris has pledged to honor Biden’s campaign promise not to raise taxes for taxpayers making less than $400,000. Democrats would like to see rate increases for taxpayers over that threshold, returning to a pre-TCJA maximum of 39.6%. Additionally, many Democrats support additional revenue raisers targeted at wealthy individuals such as the expansion of the net investment income tax and/or a wealth tax for ultra-high-net-worth taxpayers.

Trust, estate and gift tax

The estate tax exemption is the primary focus in this area. Generally, Republicans would like to see the current amount ($10 million per taxpayer, indexed for inflation; $13.61 million for 2024) extended or the entire estate tax repealed and Democrats prefer to make it more restrictive; however, this is an overly simplified view. Each party has a myriad of proposals from members, each of which may address an individual exemption amount, a spousal exemption amount, the tax rate, treatment of unrealized capital gains and step-up basis treatment.

International tax

While both Democrats and Republicans are concerned with multinational entities (MNEs) shifting their profits to lower-tax countries, they fundamentally disagree on the best approach to foreign tax policy.

The primary dispute centers around whether the United States should adopt the Pillar Two framework. Under the Organisation for Economic Co-operation and Development (OECD) Inclusive Framework, approximately 140 countries have agreed to a two-pillar global solution. The second pillar of the solution, often referred to as Pillar Two, applies to large MNEs, ensuring they pay a global minimum effective tax rate of 15% on income arising in each jurisdiction in which they operate.

The Biden administration was involved in the development of the global tax agreement and fully supports its adoption. Correspondingly, most Democrats would like to shift foreign tax policy to align with the OECD’s Pillar Two. They believe it will result in the best outcome for the United States in the long run for both tax collection and global trade relations.

Republicans oppose Pillar Two and believe it will lead to the United States losing tax revenues to foreign countries. Instead, Republicans favor the current TCJA foreign tax provisions. Several of those provisions have scheduled rate changes that will go into effect in 2026 absent Congressional action. Republicans would prefer to avoid these tax increases, in addition to making a few other tweaks to how MNEs are currently taxed.

Below is a comparison of the current rates, which Republicans would prefer to keep, scheduled changes to rates under TCJA and portions of Biden’s FY25 Green Book foreign tax proposals, which generally align with Democratic priorities.

The rates in the table above are applicable to domestic corporations. Global intangible low-taxed income (GILTI) rates would also apply to individual taxpayers under a section 962 election.

Other items

There are two additional items where Democratic and Republican tax priorities diverge that are worth noting:

Last updated Oct. 14, 2024 

The information provided here is of a general nature and is not intended to address the specific circumstances of any individual or entity. In specific circumstances, the services of a professional should be sought. Tax information, if any, contained in this communication was not intended or written to be used by any person for the purpose of avoiding penalties, nor should such information be construed as an opinion upon which any person may rely. The intended recipients of this communication and any attachments are not subject to any limitation on the disclosure of the tax treatment or tax structure of any transaction or matter that is the subject of this communication and any attachments.