As former President Donald Trump secures the Republican presidential nomination, both political parties are eyeing Project 2025, a multi-pronged policy plan created by conservative think tank The Heritage Foundation as a collective effort with more than 100 other right-leaning organizations. If enacted, the plan could overhaul the U.S. income tax system and revamp the IRS, among other changes.
While Trump claims to have no knowledge of Project 2025 and tries to distance himself from it, several former Trump officials have been directly affiliated with the project. Trump praised the Heritage Foundation in a resurfaced video, which contradicts his statement of not being involved. The Biden campaign describes the plan as a “blueprint for Trump” despite Trump’s denial of any connection.
The Heritage Foundation states that Project 2025 does not speak for any candidate or campaign but is a collection of policy recommendations for the next conservative president. The organization believes that President Trump will decide which recommendations to implement if he assumes office again. The Heritage Foundation asserts that they are a coalition of conservative groups advocating for policy and personnel recommendations, emphasizing that the final decision rests with the president.
Project 2025 aims to promote prosperity by reducing marginal tax rates, lowering the cost of capital, and broadening the tax base. The plan calls for a simple two-rate individual tax system with flat rates of 15% and 30%, departing from the current seven brackets with a top rate of 37%. The proposal could result in individuals paying more or less in federal income taxes based on their current bracket. Most deductions, credits, and exclusions would be eliminated, potentially affecting state and local tax breaks and education incentives.
Under Project 2025, taxes on investments for higher earners would be lowered, with capital gains and qualified dividends levied at 15%. The plan also abolishes the net investment income tax, reducing the combined tax rate for top earners. Estate and gift tax exemptions enacted through the TCJA would be made permanent, with changes such as lowering the estate and gift tax rate to a maximum of 20%.
Project 2025 includes a debate on conservative trade policy, with opposing views on tariffs. Former White House trade advisor Peter Navarro supports U.S. tariffs, while Competitive Enterprise Institute president Kent Lassman advocates for lowering or repealing tariffs to make American goods more affordable. Trump’s previous calls for tariffs and proposals for an “all tariff policy” align with Navarro’s views, despite his claim of being unaware of Project 2025.
Project 2025 proposes changes to reduce the intrusiveness and increase the accountability of the IRS. The plan recommends budget cuts for the agency, focusing on increasing resources for the Office of the Taxpayer Advocate. There are suggestions to enhance technological capabilities within the IRS and conduct a serious review of information reporting, emphasizing the need for transparency and efficiency.
Project 2025 presents a comprehensive policy plan with far-reaching implications for taxes and the IRS. Whether the proposed changes will come to fruition depends on various factors, including congressional approval and the priorities of the next administration. As political parties analyze the potential impact of Project 2025, the debate surrounding tax policy and IRS reforms continues to evolve, shaping the future of economic governance in the United States.