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Project 2025 would overhaul the U.S. tax system. Here’s how it could impact you.
What are the objectives of “Project 2025”?
Project 2025, a 900-page blueprint for the next Republican president, is gaining attention for its proposals to reform the federal government. Among those changes: a major restructuring of the U.S. tax code.
President Biden and Democrats have been citing Project 2025 in recent weeks as they seek to highlight what could be in store if former President Donald Trump wins the election in November and retakes the White House in January. Many of the proposals in the project touch on economic issues that could impact millions of Americans, as well as social issues like abortion and diversity, equity and inclusion, or DEI, topics.
Project 2025overseen by the conservative Heritage Foundation, it is led by two former Trump administration officials: project director Paul Dans, who was chief of staff at the Office of Personnel Management, and Spencer Chretien, a former special assistant to Trump who is now the project’s associate director.
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The Project 2025 tax proposals, if passed, would likely affect all adults in the U.S. by eliminating the nation’s longstanding system of multiple tax brackets, which was designed to help low-income Americans pay a smaller share of their income in federal taxes compared to middle- and upper-income workers.
Currently, there are seven tax bands — 10%, 12%, 22%, 24%, 32%, 35% and 37% — each based on income thresholds. For example, a married couple pays 10% in federal income tax on their first $23,200 of income, then 12% on earnings from $23,201 to $94,300, and so on. Married couples need to earn more than $487,450 this year to hit the top tax rate of 37%.
Project 2025 argues that the current tax system is too complicated and expensive for taxpayers to navigate. To remedy these problems, it proposes just two tax rates: a flat 15% tax for people earning up to about $168,000, and a 30% income tax for people earning above that, according to the document. It also proposes eliminating “most deductions, credits and exclusions,” although the bill does not specify which would be eliminated and which would remain.
“The federal income tax system is progressive, and people who make more money pay a higher marginal tax rate than people who make less money,” Brendan Duke, senior director of economic policy at the left-leaning Center for American Progress, told CBS MoneyWatch. “Conservatives look at that and think it’s unfair to ask the wealthy to pay a larger share of their income in taxes than lower-income families.”
The Project 2025 proposal “is a dramatic reform of how we fund our government, where we ask the wealthy to contribute more than lower-income families,” he said. “It shifts taxes from the wealthy to the middle class, period.”
The Heritage Foundation and Project 2025 did not immediately respond to a request for comment.
Project 2025 Tax Rates
Millions of lower- and middle-class families would likely face significantly higher taxes under Project 2025’s proposals.
He estimated that a middle-class family with two children and an annual income of $100,000 would pay $2,600 in additional federal income tax if they faced a flat 15% tax on their income due to the loss of the 10% and 12% tax brackets. If the Child Tax Credit were also eliminated, they would pay an additional $6,600 compared to the current tax system, Duke said.
By comparison, he estimated that a couple with two children and income of $5 million a year would enjoy a tax cut of $325,000.
“That 15 percent bracket is a big deal in terms of raising taxes on middle-class families,” Duke said.
Millions of U.S. households earning less than $168,000 would likely face higher taxes at a 15% rate. Currently, the bottom half of American taxpayers, who earn less than $46,000 a year, pay a effective tax rate of 3.3% — which reflects your income taxes after deductions, tax credits, and other benefits.
Among other tax and economic changes proposed by Project 2025:
- Cut the corporate tax rate from 21% to 18%, which was enacted in the Tax Cuts and Jobs Act of 2017. Prior to the TCJA, the corporate tax rate was 35%.
- Reduce capital gains tax to 15%. Currently, high-income earners pay a 20% tax on their capital gains.
- Elimination of credits for green energy projects created by the Inflation Reduction Act.
- Considering the introduction of a consumption tax in the US, such as a national sales tax.
- Eliminate the Federal Reserve’s mandate to maintain full employment in the labor market.
To be sure, overhauling the tax system would require lawmakers to pass changes to the tax code, which could be difficult if the House or Senate were controlled by the opposite party. For example, Trump managed to get his Tax Cuts and Jobs Act passed by a Republican-led Congress, even though no Democrats voted in support of the measure.
What does Trump say about Project 2025?
Trump has distanced himself from Project 2025, with his campaign proposing his own plans through “Agenda 47. “While Trump has yet to propose any concrete tax plan, he has hinted at his proposal to create a 10% tariff on all imports and a 60 percent tariff on Chinese imports, which could raise enough money to eliminate the federal income tax.
But tax experts say the math doesn’t work because the money raised from the new tariffs would fall far short of replacing more than 2 trillion dollars in individual income taxes collected by the IRS each year. Consumers are also likely to pay more in higher costs for imported consumer goods and services with tariffs added to them, experts note.
“A tariff is a tax on consumption and there is a dividing line between [Project 2025’s] tax reform and what Trump talked about, getting rid of taxes in favor of a consumption tax,” Duke noted.
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The spotlight next week will shift somewhat to the Federal Reserve’s second-quarter earnings season and monetary policy. Market watchers will be treated to results from several major names, including Dow 30 components Goldman Sachs (GS), UnitedHealth (UNH), Johnson & Johnson (JNJ) and American Express (AXP), along with streaming giant Netflix (NFLX).
The Fed will still attract some attention as investors will be eager to hear from a packed lineup of central bank speakers just before the policy meeting lockout period.
In terms of the economic calendar, after fifteen days of labor market and inflation indicators, activity data will gain momentum in the form of the latest retail sales and industrial production reports.
Earnings Highlight: Monday, July 15 – Goldman Sachs (GS) and BlackRock (Black). See the full earnings calendar.
Earnings Highlight: Tuesday, July 16 – UnitedHealth (UNH), Bank of America (BAC), Progressive (PGR), Morgan Stanley (IN), PNC Financial (PNC) and JB Hunt Transport (JBHT). See the full earnings calendar.
Earnings Highlight: Wednesday, July 17 – Johnson & Johnson (JNJ), US Bancorp (USB), Morgan Children (KMI), United Airlines (UAL) and Ally Financial (ALLY). See the full earnings calendar.
Earnings Highlight: Thursday, July 18 – Netflix (NFLX), Abbott Laboratories (ABT), Black stone (BX), Domino’s pizza (ZDP) and Taiwan Semiconductor Manufacturing (TSM). See the full earnings calendar.
Earnings Highlight: Friday, July 19 – American Express (AXP), Halliburton (THANKS) and Travelers (VRT (return to recoverable value)) See the full earnings calendar.
IPO Observation: Hospital and healthcare clinic operator Ardent Health Partners (TARDT), insurance service provider Twfg (TWFG) and the biotechnology company Lirum Therapeutics (LRTX) are expected to price their IPOs and begin trading next week. The analyst quiet period ends at Rectitude (RECT) to free up analysts to publish ratings.
Police cars outside the residence of Thomas Matthew Crooks, the suspected shooter at a Trump rally on Saturday, investigate the area in Pennsylvania. Following the incident, one rally attendee was killed, two rally attendees are in critical condition and Donald Trump suffered a non-fatal gunshot wound. The shooter is dead after being shot dead by the United States Secret Service. (Photo by Kyle Mazza/Anadolu via Getty Images)
Investors will initially favor traditional safe-haven assets and may lean toward trades more closely tied to former President Donald Trump’s chances of winning the White House after he survived an assassination attempt, according to market watchers.
“There will undoubtedly be some protectionist or safe-haven flows into Asia early this morning,” said Nick Twidale, chief market analyst at ATFX Global Markets. “I suspect gold could test all-time highs, we’ll see the yen being bought and the dollar, and flows into Treasuries as well.”
Early market commentary suggested Trump’s shooting at a rally in Pennsylvania on Saturday could also prompt traders to increase his likelihood of success in the November election. His support for looser fiscal policy and higher tariffs is generally seen as likely to benefit the dollar and weaken Treasuries.
An indicator of market sentiment heading into the weekend: Bitcoin surged above $60,000, likely reflecting Trump’s pro-crypto stance.
Other assets positively linked to the so-called Trump trade include stocks of energy companies, private prisons, credit card companies and health insurers.
Traders will also be closely watching market measures of expected volatility on Monday, such as those in the tariff-sensitive Chinese yuan and Mexican peso, which have begun to price in the U.S. vote.
Trump said he was shot in the right ear after a shooting at his rally. His campaign said in a statement that he was “fine” after the incident, which prompted him to rush off the stage.
“Currencies will be the first major market on Monday in Asia to react to the weekend’s shots. There’s potential for extra volatility, and getting a clear reading could be especially difficult because liquidity will be hurt by Japan’s national holiday,” said Garfield Reynolds, Asia team leader for Bloomberg Markets Live.
Strategists had already expected a volatile run-up to the election, particularly as Democrats are still agonizing over President Joe Biden’s candidacy after his poor performance in last month’s debate raised questions about his age. Investors were also grappling with the possibility that the election could end in a drawn-out dispute or political violence.
But there is little precedent for events like those in Pennsylvania. When President Ronald Reagan was shot four decades ago, the stock market plunged before closing early. The next day, March 31, 1981, the S&P 500 rose more than 1% and benchmark 10-year Treasury yields fell 9 basis points to 13.13%, according to data compiled by Bloomberg.
Bond investors should pay particular attention as the attack is likely to boost Trump’s election chances and ultimately lead to concerns about the fiscal outlook, according to Marko Papic, chief strategist at California-based BCA Research Inc.
“The bond market must at some point become aware of President Trump’s greater chances of winning the White House than any of his rivals,” Papic wrote. “And I continue to believe that as his chances increase, so too must the likelihood of a bond market revolt.”
Kyle Rodda, senior financial markets analyst at Capital.com, said he was seeing client flows into Bitcoin and gold following the shooting.
“This news marks a turning point in American policy norms,” he said. “For markets, it means safe-haven trades, but more tilted toward non-traditional safe-havens.”
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Jio Financial share price: Should you buy this Reliance group stock on Monday ahead of Q1 FY2024 results?
Q1 2024 Results: Jio Financial Share Price will be in focus on Monday as the Reliance Group company has a fixed board meeting on July 15, 2024 to consider and approve the company’s unaudited standalone and consolidated financial results. Trust Group company informed about the Q1 2024 Results date on Wednesday last week via an exchange filing. According to stock market experts, Jio Financial Services Limited is poised to deliver impressive Q1 results for FY25 on solid operating income. They have forecast a healthy QoQ PAT for the company in Q1 FY25.
Jio Financial Services News
Speaking on the Jio Financial Services Q1 2024 results, Manish Chowdhury, Head of Research, StoxBox, said, “We believe Jio Financial Services is poised to deliver impressive results in Q1FY25 aided by its operating income, which is likely to show robust growth driven by strong investment income, which in turn should lead to healthy PAT growth on a sequential basis. Jio Financial Services continues to make strategic moves such as launching digital products and expanding its ecosystem, with a clear focus on future growth. The company has announced plans to introduce products for lending against stocks and mutual funds, leveraging Jio’s large user base, which could be a significant growth driver in the coming quarters.”
“Furthermore, with the NBFC receiving RBI approval to become a primary investment company, Jio Financial Services is well-positioned to unlock value from its investments. Overall, we expect the company to report robust numbers in the upcoming quarter,” the StoxBox expert added.
Jio Financial Stock Target Price
Speaking about the technical outlook of Jio Financial share price, Ganesh Dongre, Senior Manager, Technical Research at Anand Rathi, said, “Jio Financial Services share price is poised to make a fresh high at the ₹260 apiece level. If the stock breaks above this mark, the Reliance Group stock could make a fresh high by touching the ₹290-₹295 zone. Hence, those with Jio Finance stock in their portfolio are advised to stick to the script by keeping a stop loss at ₹205. If the stock breaks above ₹260 decisively, then one can upgrade the stop loss at ₹240 for the near-term target of ₹295.”
On the advice to new buyers regarding Jio Financial stock, Ganesh Dongre said, “New buyers are advised to wait for the breakout. Once the stock breaks above ₹260, one can buy this Reliance Group stock at the short term target of ₹295, keeping a stop loss of ₹240 apiece.”
Disclaimer: The views and recommendations made above are those of individual analysts or brokerage firms, and not of Mint. Investors are advised to consult with certified experts before making any investment decisions.
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