US tax changes could come before 2020 election

Subject

The political debate about taxation in the United States.

Significance

The 2020 election in November will be fought over a wide array of policy areas, but one of the central debates will be over the appropriate taxation policy to pay for candidates’ pledges, without undermining the economy. Democratic presidential candidates, who enter primary elections from February to decide the nominee, have made major spending proposals. Meanwhile, President Donald Trump, the assumed Republican nominee, wants more tax cuts. Given political concern about increasing taxes, and US demographic changes, there is increasing attention towards assessing new areas for tax income.

Impacts

• The complexity of the tax code and of avoidance strategies could grow, incentivising recourse to lawyers and accountants.
• The Democrats will be divided over capital gains taxes, which are likely to be problematic for Democratic donors.
• If a wealth tax passed, a Supreme Court ruling would be likely to limit Congress’s taxing ability.