This is Part 4 of a deep dive into Project 2025. For Part #3, click here. To start at the beginning, click here.
In Part 3, we learned that the Project aims to transform our nation’s governance through volumes of policy proposals grouped into four main “pillars,” as they call them. We introduced Pillar #1 – “Restoring the Family as the Centerpiece of American Life,” where the authors emphasize that “the family” is fundamental to the nation’s moral and social fabric. How? Through promoting traditional family structures and conservative values as they see them involving a heavy emphasis on both abortion policy and gender ideology policies.
Before we consider Pillar #2 of the Project 2025 goals, there are a handful of really big ideas either directly mentioned in the Project 2025 policy manual or that can be directly tied to the clearly stated objectives of Pillar #1. Our dive into Pillar #1 would be incomplete if we left these out, so let’s wrap them up.
POLICY: Revamping the Income Tax Code
At its core, Project 2025’s proposed tax reform proposals are about giving more power and control back to the average American. Pillar 1 of the Project focuses on reducing the federal government’s influence in everyday life, and changing the tax system is a major way to do that. By simplifying the tax code, lowering rates, and cutting back on complicated deductions, the idea is to make it easier for people to keep more of their money and for businesses to thrive without government interference. Essentially, the goal is to create a system that encourages economic growth while limiting the size and role of the government in managing people’s finances. This reflects the mission of Pillar 1: putting more control in the hands of individuals rather than in the hands of Washington bureaucrats.
That, my friends, is exactly how a conservative contributor to Project 2025 would frame everything they are proposing. No doubt others disagree significantly with the rationale behind this framing.
Project 2025’s proposals on revamping the income tax system aim to simplify the tax code, reduce the overall tax burden, and encourage economic growth. Let’s see what these might practically look like.
How Might They Change the Income Tax System?
As we better understand the broader goals that a conservative plan like Project 2025 aims to achieve, transforming the Income Tax System makes more sense as a way to help achieve those goals. Here’s the consensus from analysts on what would most likely happen.
- Cutting the Number of Tax Brackets: The existing tax brackets would be reduced to fewer, simpler ones—the most common idea suggests two main brackets of 15% and 30%.
- Eliminating or Reducing Deductions and Exemptions: A big change would involve eliminating numerous deductions, exemptions, and credits, including popular provisions like the mortgage interest deduction. If they were to pursue this, the most likely scenario for simplifying things would be eliminating all of them.
- Lowering Corporate Taxes and Ending The Estate Tax: Because Project 2025 emphasizes business-friendly tax policies, it would propose further reductions in corporate tax rates and the complete elimination of the estate tax (often called the “death tax” by opponents), which conservatives like The Heritage Foundation view as penalizing wealth creation and inheritance.
These proposals would likely all be framed as ways to enhance economic liberty, reduce government complexity, and give individuals and businesses more direct control over wealth and income.
Estate Taxes
These changes affect people differently. Let’s start with the least significant one: the Estate Tax. The current law levies a tax of between 18% and 40% on estates totaling approximately $13 million for individuals and $26 million for married couples. So, this would affect only about 0.2% of estates in the country.
But large estates generate large revenue. Eliminating this would remove $20-$30 billion from the Treasury. Let’s call it $25 billion for kicks.
What would happen if they did that? They’d have to make it up somewhere else (bear with me, we’re making a simplified argument here). The bottom 50% of tax filers in the US are those making less than $44,000. That’s about 70 million filers. Together, they pay about $60 billion a year in income tax (about $850 a year, mean average). That means 0.2% of rich estates contribute as much in tax (estate tax) as about 40% of all the income taxes paid by the bottom half of the country.
If they had to make this tax loss up by raising taxes on everyone else, given that there are about 150 million total filers, it would mean everyone else’s taxes would need to go up by about $160 a year. Someone making $80,000 might not feel $160 a year in increased withholding. But a person barely getting by, making $35,000 a year and paying $2,200 a year before any deductions would certainly feel it.
If you said, “Well, let’s just raise the taxes on the upper half who can better afford it,” that does change the figures. Doing that would raise the cost per filer by 2x to $320 annually. And we might say, “Eh, that’s not that much.” But we must remember……raising taxes on higher-income people goes against everything the conservatives behind Project 2025 say is right for the country. The rhetorical question here might be, why do we need to raise taxes on someone making $50,000 or $60,000 a year so that the children of someone worth $40 million don’t have to pay taxes on that? Do we really think it’s good to make someone earning $35,000 yearly pay more income taxes so those others don’t have to? We all have different opinions on the answers to those questions, but they are fair questions to consider.
The bigger proposal to consider is the proposed change in the tax brackets. We have to crunch more numbers to understand how that would affect people more fully.
Everyone starts with about a $14,600 personal deduction; taxable income starts above that.
Up to $11,000 (taxable income), you pay 10%. That means someone making $25,600 ($14,600 + the $11,000) will pay 10% of that $11,000, or $1,100 in income tax.
The next $34,725 above that is taxed at 12%. That means people making up to $59,325 would pay around $5150 in total income tax.
With all the taxpayers to this point, we’ve covered 80% of tax filers in the United States, about 135 million individual and married filers.
The rates increase as we go higher. The next $51,000 (approximately) is taxed at 22%. You have rates of 24%, 32%, 35%, and the maximum of 37% that income above $592,000 (approximately) a year gets taxed at.
This means if you (or you and your spouse) make $110,000, you pay a little over $16,000 in income tax.
If you make $210,000 a year, you pay around $41,000 in income tax.
If you make $610,000 a year, you pay around $174,000 in income tax.
If you make $1.61 million a year, you pay almost $550,000 in income tax.
I list all those out because we will use some figures to compare.
How would all this change under a new system?
A two-tax bracket system?
The most likely proposal is restructuring all these rates into just two brackets.
15% for “low and middle income,” with the most likely cutoff being $85,000 for singles, $170,000 for married, and a 30% bracket for “higher income” filers above those limits.
But you also must remember that they would want to consolidate these rates while eliminating virtually all the usual deductions people use to reduce their taxable income. Remember, part of the goal is simplifying the tax code. Now, under Project 2025, if you make $70,000, it’s 15%, straight up, nothing subtracted or added. That kind of thing.
Many people like the idea of a simple tax code that doesn’t take hours to calculate your taxes.
But…. will they like the results?
Remember that low-income person making $25,000 a year? They paid $1,100 in income taxes (and they can probably barely afford that). Under a new tax system from the Project 2025 rationale, they would pay…. $1,560. Their taxes would rise by almost 50%. They would be forced to come up with an extra $460 a year or $38 a month. That doesn’t sound like a lot, but if you know anyone making that little, you know that could be a real struggle.
Let’s look at some examples that might affect more people we know.
What about taxes for married couples?
What about a married couple where one of them manages a mid-size store and makes, say, $55,000 a year? Right now, they pay about $3,000 a year in taxes. Under Project 2025, they would pay $6,000 a year. Their taxes would increase by about 100%—an extra $250 monthly.
Consider a married couple with two kids, both parents working and making $110,000 together, meaning both have decent white-collar jobs, but they’re not “rich” by any means. They’re comfortable. They pay about $5,500 yearly, partly because both kids have a $4,000 child tax credit. Under Project 2025, their rates would increase, and the Child Tax Credit would likely go away, meaning they’d be paying $12,000 a year. Their taxes would go up by 118%.
Would anyone end up not paying more taxes? Sure, absolutely.
Whose taxes would go down?
A married couple making $610,000 (the earlier example was a single person) pays $225,000 in income tax. Under Project 2025, they’d pay $174,000, a drop of almost 25%, or more than $70,000.
A married couple making $1.61 million currently pays $666,000 in income tax. Under Project 2025, they’d pay almost $200,000 less – $474,000. And their taxes would drop by a larger percentage (30%) than those making $610,000.
The long and short of it is that unless the government retained aspects of the current tax system (like certain deductions or the Child Tax Credit), every person making less than $231,000 would see their income taxes go up, as would every married couple making less than $462,000.
The bright side is that Travis Kelce ($12 million made) and Taylor Swift (more than $335 million) would have an extra $24 million to spend because their taxes would go down by that much. I’m not sure how much the low-income person whose ability to make rent will be affected will feel about that, though.
Question: Are These Specific Proposals or Simply Speculations?
When we began laying out policy ideas from Project 2025, we pointed out that there are two kinds of policy associated with the Project – specifics which the Project spells out vs. inferences that people reading the Mandate for Leadership manual would say are what would logically follow if the president decided to implement Project 2025’s recommendations.
For example, Project 2025 specifically calls for enacting a nationwide abortion ban (whether that could happen depends on other things, but they spell it out). So, when someone says, “Project 2025 advocates for a national abortion ban”, they’re being accurate.
Other things fall into the camp of “likely inferences.” Project 2025 may not specifically spell some of these out, but they are ideas and proposals that would directly align with the broader goals and objectives the Project pushes. An example of this from Pillar #1 was the possibility of non-binary individuals finding it much more difficult to seek justice under employment law for discrimination. Project 2025 doesn’t spell out, “We think labor laws should be changed so employers are free to fire transgender persons in circumstances where they couldn’t fire a heterosexual binary person.” But they DO advocate for removing gender and other references from applicable regulations and rules. Legal analysts point to that and conclude, “if that idea from Project 2025 is adopted, the other thing is very likely to follow.”
I wanted to highlight this for a couple of reasons. We’ve already covered several ideas from the Project that fall into both camps—some are specifically proposed by Project 2025, while others are “likely to follow.” We will keep this difference in mind as we cover all the other ideas that will follow in Pillars 2-4.
Proposals, Congress, & the President
The specific tax code changes, such as flattening the tax brackets or reducing deductions, are not explicitly laid out in Project 2025. Instead, the document outlines general principles and goals for reforming the tax system, focusing on lowering tax burdens, simplifying the tax code, and fostering economic growth through a more conservative fiscal policy. That’s their rationale. Specific ideas, like the two-bracket system (15% and 30%), are inferred from the overarching goals and priorities of the Project, but they are not directly mentioned in the Mandate for Leadership document itself. The specifics come from commentators and analysts who have looked at what the Project proposes and have all (or most) concluded: “To accomplish their goals, they’re definitely going to have to propose big changes to the tax system, and these kinds of changes are exactly the kind of thing that will get the whole thing where they want it to be.”
Finally, to wrap up the tax stuff, we need to point out something crucial to understand about this and other proposals. The president can’t single-handedly change the tax system. While the president plays a huge role in shaping the vision and pushing for new tax policies, Congress is the branch that writes and passes tax laws. The president would work closely with Congress to propose and promote these changes, but in the end, it’s up to the House of Representatives and the Senate to draft and vote on the tax bills, which the President would then sign.
A newly re-elected President Trump would most likely need a Republican-controlled Congress to make these changes a reality because Democrats are less likely to support the tax reforms inferred in Project 2025. Without such support, passing sweeping tax reforms would be nearly impossible. So, while the president leads the charge, Congress is crucial in turning those ideas into law. This is why the 2024 election congressional races will be so important.
Hooray for separate but equal branches of government!
Post #5 will finish exploring topics in Pillar #1 and explore how disaster relief, Medicaid, the Affordable Care Act, and federal agencies could be changed if a conservative president is elected and Project 2025 is implemented.
Image: Pamela Reynoso
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