WASHINGTON — President Joe Biden is gearing up to raise taxes on wealthy individuals in the U.S. if he’s re-elected this fall, setting the stage for a significant policy clash with Republican rival Donald Trump, who is promising even deeper tax cuts if he returns to the White House.

Major parts of the 2017 Trump tax cuts are scheduled to expire at the end of 2025, creating a stark divide between the two parties over whether to extend or end them. Extending these tax cuts would add $3.3 trillion to the national debt over the next decade, according to the nonpartisan Congressional Budget Office. Democrats are coalescing around a plan to increase taxes on higher earners, while Republicans are advocating for the preservation of these tax breaks. The outcome will largely depend on who wins the presidency and controls Congress.

Biden is promising to end the Trump tax cuts for incomes above $400,000 while vowing not to raise taxes for those making less.

“If Trump gets elected, he’ll cut taxes for him and his rich friends at the expense of working families. We can’t let that happen,” Biden said last week on social media.

Biden has consistently criticized Trump’s tax breaks for the wealthy, stating in April: “That tax cut is going to expire. If I’m re-elected, it’s going to stay expired.”

Biden’s recent budget and a memo released Thursday by top Biden economic adviser Lael Brainard outline the White House’s vision for generating new revenue: increasing the corporate tax from 21% to 28%, imposing a 25% minimum income tax on billionaires, raising the marginal tax rates on the highest incomes from 37% to 39.6%, and boosting taxes on capital gains for high earners.

On the campaign trail, Trump is celebrating his 2017 tax cuts and criticizing Biden’s tax policies.

“He wants to let our tax cuts expire!” Trump said at a rally last month in Wildwood, New Jersey. “Instead of a Biden tax hike, I’ll give you a Trump middle-class, upper-class, lower-class, business-class — big tax cut. You’re going to have the biggest tax cut.”

Trump’s plan lacks specific details and does not address the rising national debt, an issue Republicans claim to be concerned about. During a closed-door meeting with Republicans on Thursday, Trump did not mention his 2017 tax cuts, according to three senators present. Instead, he promoted a new idea that he did not pursue during his presidency: ending taxes on tips.

Democrats: 'End these damaging Trump tax provisions'

Many liberals are eager for a confrontation when Trump's tax cuts expire, and Senate Finance Committee Chair Ron Wyden, D-Ore., said he plans to meet with committee Democrats this Thursday to discuss the way forward.

Sen. Elizabeth Warren, D-Mass., said in a speech Monday: “The 2025 tax fight will create a huge opportunity to break with decades of tax-cutting political orthodoxy and reshape the tax code to reflect our nation’s values by raising taxes on the wealthy. That’s what Americans across the country are demanding, that’s what Joe Biden is running on, and that’s a big reason why Joe Biden will win in November. Next year, we must raise taxes on giant corporations and billionaires.”

Rep. Pat Ryan, D-N.Y., who represents a suburban swing district, said that with the “damaging” Trump tax cuts expiring, “2025 is a year where we can finally make the ultra-wealthy and big corporations pay their fair share.”

He emphasized the necessity of increasing revenue to protect Social Security and Medicare in the long term, accusing Republicans of wanting to cut retirement benefits “to pay for these bailouts and tax breaks” for the rich.

“So it’s a one-two punch to working people and the 99% of the American people,” Ryan said.

Meanwhile, Republicans are firmly supporting Trump’s push to extend the tax cuts across the board.

“We’ve got to have these tax cuts extended,” said Rep. Ralph Norman, R-S.C., who sits on the Rules Committee, which decides which bills get votes in the full House. “We will under Trump. We will not under Biden.”

Republicans: 'Maintain the tax cuts'

Sen. Mike Crapo, R-Idaho, the ranking member of the tax-writing Finance Committee, who could become chairman if Republicans win control of the Senate, rejected Biden’s call for tax increases on incomes above $400,000.

“No, I’m not willing to go with that,” Crapo said.

He suggested that the tax cuts might require “some fine-tuning” if extended, but he opposed any arbitrary thresholds.

Rep. Andy Barr, R-Ky., expressed his desire to see the Trump tax cuts “made permanent” and to expand them. “I’d like to see more and more aggressive supply-side tax cuts, growth-oriented tax cuts,” he said. “I’d also like to see smarter capital gains tax reductions.”

Hurdles to Biden's plan

Biden’s pledge to undo tax cuts for incomes above $400,000 is challenging. For instance, the 2017 tax cuts nearly doubled the standard deduction, which many middle-income families utilize. Additionally, many Democrats favor the expiration of the $10,000 federal limit on state and local tax deductions, which would enable higher earners to pay less. It remains unclear how Biden would rewrite the tax code to end those breaks only for upper earners and preserve them for others.

A White House official stated that the economic team has not yet developed a concrete policy proposal for this goal and mentioned “different ways to try to implement our principles.” The official also said it’s “premature” to determine whether Congress should move swiftly to impose taxes on wealthier individuals in early 2025 and whether it should use the filibuster-proof reconciliation process, which covers taxes and spending and could allow Democrats to bypass Republican opposition in Congress.

Wyden emphasized the importance of this issue for the next year, noting that congressional Democrats share Biden’s philosophy on taxes.

“You bet we will have a significant discussion about the president’s proposal,” he said. “I’ve talked to the Biden administration about this: Success and fairness are not incompatible. We want people to do well, and people are going to do well under our approaches. But if nurses and teachers and firefighters have to pay taxes with every paycheck, we want some fairness from the billionaires.”

The battle for congressional control

In addition to the presidency, the composition of Congress will determine the fate of the Trump tax cuts. Full control would give either party an open road to pursue its agenda, but divided government might force the two sides to negotiate a bipartisan deal that includes some victories for each party.

Warren urged Democrats on Monday not to “take the coward’s way out and sign our names to a half-baked deal that lets the wealthy off the hook,” warning that such a move would be a “huge failure.”

Republican Rep. Carlos Gimenez, who represents a competitive district in Florida, said any push to raise taxes, including on high earners, would be dead on arrival if Republicans retain control of the House — even if Biden is re-elected.

He affirmed his support for the Trump tax cuts. “I like what it did for our economy,” he said. “I’m a lower tax guy.”

Implications for the 2024 Election

As the 2024 election approaches, the contrasting tax policies of Biden and Trump will be a central issue, with significant implications for the nation’s economy and fiscal health. The debate over tax cuts and increases will not only shape campaign narratives but also influence voter decisions, ultimately determining the direction of U.S. economic policy for the coming years.

The debate is further complicated by the current economic climate, marked by inflationary pressures and concerns over the national debt. Both candidates will need to articulate how their tax policies will address these economic challenges while fostering growth and equity. The voters' decision will play a crucial role in shaping the fiscal future of the United States.

In this high-stakes political environment, the outcome of the 2024 election will have far-reaching consequences for tax policy, government spending, and the overall economic trajectory of the country. The contrasting visions presented by Biden and Trump offer a clear choice for voters, reflecting broader ideological divides about the role of government, economic justice, and fiscal responsibility.