Large majorities of Americans express concern that the tax system is unfair, with the wealthy and corporations paying less than their fair share. In response, "Project 2025: Presidential Transition Project," outlines plans that would raise taxes on low- and middle-income households to finance tax cuts for the wealthy and large corporations.
The proposed tax reform includes an "intermediate tax reform" that modifies tax brackets and reduces corporate taxes, shifting the burden toward middle-income households. Additionally, a "fundamental tax reform" suggests replacing all individual income and corporate taxes with consumption taxes.
Specifically, Project 2025’s plan would:
- Enact a two-income tax bracket system raising taxes by $3,000 for a median family of four earning about $110,000 annually and by $950 for a typical single-person household earning about $40,000 annually.
- Provide an average $1.5–2.4 million tax cut for the 45,000 U.S. households making more than $10 million annually through the new "two-bracket" system and reductions in investment income taxes.
- Cut the corporate tax rate to 18 percent, resulting in a $24 billion tax cut for Fortune 100 companies.
- Replace all individual and corporate income taxes with a consumption tax in the long term.
The shift towards a flat consumption tax while eliminating income taxes could lead to an average $5,900 increase in taxes for middle-income households and an average $2 million cut for the top 0.1 percent.
The intermediate plan consolidates seven individual income tax brackets into two: 15 percent and 30 percent. This simplification raises concerns as it shifts the burden from wealthy filers to middle-income ones. The current bottom brackets (10 percent and 12 percent) are lower than the proposed 15 percent bracket, effectively increasing rates on incomes between approximately $30,000 to $120,000 for married couples and between approximately $15,000 to $60,000 for single filers.
Additionally, Project 2025 proposes eliminating most deductions, credits, and exclusions without specifying which ones. If key provisions like the child tax credit or earned income tax credit were removed, low- and middle-income families would face even larger increases.
For high earners making over $10 million annually, Project 2025 proposes taxing capital gains and qualified dividends at 15 percent—a reduction benefiting those earning above $500,000 per year—and eliminating the net investment income tax of 3.8 percent on capital gains and dividends.
On corporate taxation:
Project 2025 suggests further reducing corporate rates from 21 percent to 18 percent—building on previous reductions enacted in 2017—resulting in significant savings for large corporations such as Exxon Mobil ($1.3 billion), Johnson & Johnson ($1.6 billion), JPMorgan Chase ($2.1 billion), Kroger ($800 million), among others.
Furthermore:
Project 2025 aims to repeal recent corporate tax increases from the Inflation Reduction Act including a minimum corporate rate of 15 percent for large corporations and an excise tax on stock buybacks.
In its fundamental reform:
Project 2025 advocates replacing current income-based taxation with a flat consumption-based model citing potential economic efficiency benefits but acknowledging substantial impacts on prices due to inflationary pressures from implementing value-added taxes (VAT) upwards of 45 percent.
Critics argue this shift would disproportionately affect low- and middle-income households while providing substantial relief to wealthier individuals due to inherent regressive nature of flat consumption taxes versus progressive income taxation systems currently in place.
