Allan Lichtman is weirdly famous. Of course, by famous I mean historian-famous, not Taylor Swift-famous. Or even Ron Chernow-famous — not every historian gets a helping hand from Lin-Manuel Miranda.
But Lichtman, a history professor at American University, is indisputably famous among a certain group of extra-online, hyperpolitical news junkies. These people are fascinated by Lichtman because he makes ironclad predictions about who will win each presidential election. (He’s picked Kamala Harris this year.)
Lichtman eschews the more defensible probabilistic forecasts like the ones from Nate Silver and other number crunchers. Lichtman likes his predictions to be clear and falsifiable, and he has a decent (if also problematic) track record.
Critics think Lichtman plays fast and loose with the rules of a game that he invented. As a recent critique in The Atlantic pointed out, his predictive system — based on 13 “keys” designed to assess the record of the incumbent White House party — is not exactly scientific; some of the keys seem arbitrary and many rely on impressionistic, subjective judgments.
And it’s not altogether clear that Lichtman’s record is all that impressive. He claims to have accurately predicted nine of the last 10 presidential elections. (And arguably all 10, depending on how you treat the 2000 election — Lichtman thinks it was stolen, apparently.) But many of these predictions were easy, with contests that weren’t especially close.
Ultimately, however, what’s interesting about Lichtman is not his track record but his popularity. People crave clear answers, especially in the face of heightened uncertainty. And Lichtman is happy to give the people what they want, insisting that history can predict the electoral future with near-perfect accuracy.
Count this historian among the skeptics. History is a blunt instrument for making predictions, and responsible historians are careful even when trying to distill relevant “lessons” from the past. Princeton’s Kevin Kruse — one of the best U.S. political historians of his generation — recently acknowledged the limits of the craft. “My professional training is in the field of hindsight,” he wrote. “All my work is looking backward with the evidence, not making guesses without it.”
The widespread desire for falsifiable predictions is understandable. But as they say on Wall Street, past performance is not indicative of future results. History doesn’t actually repeat itself — even when it seems like it does.
But that doesn’t mean history is useless. It can provide useful insights about the past that inform our understanding of the present. More specifically, history can expand our notion of what’s possible — while also limiting our notion of what’s likely.
With that aphorism in mind, here are some thoughts about the 2024 election and its likely impact on tax policy.
What’s New?
If something has happened before, it’s not unreasonable to think that it might happen again. When it comes to tax policy, that instinct usually leads to a question: What can we expect from a new president and new administration when it comes to federal tax policy?
Let’s start by questioning the premise as it applies to 2024. Neither candidate is likely to be a truly “new” president. Donald Trump would be new in the sense that he would not be succeeding himself. And his victory would mark a change in party control of the White House, which would certainly bring a shift in priorities — and maybe the arrival of a new tax policy regime.
But is a freshly inaugurated president serving a discontinuous second term really “new” in most of the ways that actually matter? Grover Cleveland’s story might suggest otherwise. As the only president to serve nonconsecutive terms, Cleveland has something to tell us about “newness.” Cleveland was essentially the same president from 1893 to 1897 as he had been from 1885 to 1889.
(As an aside: Cleveland built his nonconsecutive terms on opposition to tariffs, not a Trump-style passion for them. But this observation is a good example of history as curious incongruity rather than history as predictive device.)
Like Cleveland, a second-term Trump would be no neophyte when it comes to governing; he wouldn’t face the same learning curve that actual first-term presidents struggle to navigate. Second, Trump isn’t “new” to the American public, either. Americans know a lot about him, and many have strong opinions about his presidency. By contrast, first-term presidents are typically a bit harder to gauge.
The uncertainty of a new presidency contributes to the honeymoon that some chief executives have enjoyed. An early glow of public support can grease the skids for presidential priorities, especially on Capitol Hill.
But in Trump’s case, it’s not clear that a honeymoon is likely to materialize. (Unless Republicans win big, capturing both houses of Congress in addition to the White House — in that case, most bets are off.)
In the 20th century, Franklin D. Roosevelt set the standard for presidential honeymoons. The first 100 days of his presidency were famously productive (although notably, Roosevelt included no big tax reforms in that first legislative blitz).
Later presidents have tried to copy FDR’s success, but no one has come close — including Trump. Trump did manage to push through a major tax reform, albeit after the end of his first 100 days. And while critics have underscored the failure of certain items on Trump’s early agenda, including repeal of the Affordable Care Act, his success in seeking tax reform says a lot about the power of presidential priorities: When new — or even newish — presidents put tax reform high on their wish lists, they can make real progress. Recent evidence of this phenomenon would include Ronald Reagan, Bill Clinton, and George W. Bush, albeit in service to different political agendas.
Serious About SALT?
It’s a truism of current politics that we should take Trump seriously but not literally. But in some respects, it’s reasonable to take Trump more literally this time around. As noted above, he’s not a new president. He knows how to do the job — and how he wants to do it differently than the last time.
And when it comes to specific tax issues, Trump seems pretty clear about his goals. I’m not referring to his grab bag of giveaways, like ending the taxation of tips and Social Security, providing for the deductibility of interest paid on car loans, a new tax credit for caregivers, or whatever vote-maximizing proposal he’s floating this week. Rather, Trump is clearly determined to see his 2017 tax cuts extended.
On the other hand, Trump has also floated the possibility of certain changes to the 2017 law. In September he suggested that he might support the elimination of the cap on the state and local tax deduction. “I will turn it around, get SALT back, lower your Taxes, and so much more,” he wrote on Truth Social.
The SALT cap is complicated for Republicans. Removing it would be expensive, costing about $1.2 trillion over 10 years, according to the Committee for a Responsible Federal Budget. But leaving the cap intact would be problematic, too, especially if margins are close in the new Congress. Lawmakers from high-tax states — including Republicans — have made clear their ardent devotion to the cause of restoring the deduction.
The SALT cap illustrates the tricky politics certain to surround the TCJA extension. Sure, compromise is possible, even likely; lawmakers might choose to raise the cap for both single and married taxpayers, or maybe raise it for married taxpayers only, for instance. But all these possibilities have to be weighed against the fate of other provisions of the TCJA, which might reshape the deduction anyway (including the return of stricter rules for the alternative minimum tax).
The SALT cap is an issue tailor-made for successful bipartisan compromise, since it crosses party lines. But the provision’s fate will depend heavily on whether the SALT caucus in Congress holds pivotal power in the next two years — which seems likely. But it held that sort of power in the last Congress, and it didn’t make the difference.
At least not yet.
Tariff Talk
It’s possible that Trump’s talk about the SALT cap is less than serious — just one more in a laundry list of targeted tax cuts designed to win votes from specific constituencies and burnish his brand as a tax cutter.
But Trump seems undeniably serious about tariffs. During his first term, he made good on promises to get tough with trading partners. During this year’s campaign, he’s outlined even more dramatic plans, promising to reshape the global trade system in ways not seen since the 1930s. Tariffs are a centerpiece of his campaign.
There aren’t many guardrails on a president’s power to impose tariffs, especially when they’re framed in terms of foreign policy and national security. Sure, the Constitution gives Congress power over tariff policy (and other sources of federal revenue), but lawmakers have long since delegated much of that power to the executive branch — and they don’t seem inclined to take it back.
Of course, Trump’s tariff talk includes a lot of hyperbole. He muses about imposing tariffs of truly staggering size: “I will impose whatever tariffs are required — 100 percent, 200 percent, a thousand percent!” as he said during a Detroit speech about auto imports.
Trump has also suggested several times (most recently during an interview with Joe Rogan) that tariff revenue might make the income tax unnecessary. Asked by Rogan whether he was serious about tax replacement, Trump was clear, if characteristically flippant: “Yeah, sure. Why not?”
Presumably, these are the sort of Trump comments we are not supposed to take literally. But even when adjusted for rhetorical inflation, Trump has signaled plans for a starkly different sort of tariff regime.
It seems prudent to take Trump seriously when he talks about tariffs, and some smart analysts are doing exactly that. To be sure, the laws of political gravity will still apply; even a compliant Congress will give Trump some pushback.
But the historical lesson is clear: Presidents have wide-ranging, lightly constrained authority to make good on their tariff promises. Trump seems likely to make the most of his delegated power.
Harris and Intraparty Continuity
Returning to the “newness” question: Harris needs an asterisk on this score, too. Obviously, she has never been president before, and her inauguration would bring important changes to the executive branch. In recent weeks, she has tried to underscore that fact, putting some rhetorical distance between herself and Joe Biden.
But when a vice president inherits the Oval Office from a president of the same party, there is typically a lot of continuity to go along with the obvious change. Vice presidents are not especially “new” when they move up to the big chair.
Such generalizations, of course, are necessarily built on a small sample size. Confining ourselves to the years after World War II, the intraparty transitions included Franklin Roosevelt to Harry Truman, John Kennedy to Lyndon Johnson, and Ronald Reagan to George H.W. Bush. That’s just three in 79 years.
Still, continuity was the byword during each of these transitions, especially early on. It seems reasonable to expect the same today should Harris follow Biden into the Oval Office.
Taking Harris Symbolically
If we should be careful about taking Trump literally, the same is true for Harris. Campaigns are aspirational, filled with half-baked proposals designed to send a message rather than establish a set of solid governing priorities.
Some of Harris’s campaign tax proposals have worried well-heeled voters. Specifically, her plans to reform the taxation of capital gains have alarmed more than a few wealthy (and excitable) taxpayers.
Trying to limit the preference — especially for wealthy taxpayers — seems like a political winner. But there are good reasons to be skeptical. Changing the taxation of capital gains is notoriously hard. In one form or another, the preference is more than a century old, and except for a few years in the Reagan administration, it has proven impervious to dramatic change. That’s not to say lawmakers haven’t repeatedly tinkered with its specifics, or that those changes have been unimportant. But the preference itself has always survived in recognizable form.
And as for talk about trying to tax unrealized gains? Even some rich people understand that Harris will never make that happen.
“So some people think that there’s going to be an unrealized gains tax on capital gains,” said businessman and television personality Mark Cuban at a recent campaign event. “There is not. There is not.” Sure, Harris has floated the idea (by embracing Biden’s larger economic agenda). But Cuban doesn’t take her literally. “When I saw that, I went ballistic because that’s an economy killer,” he said at the rally. “Kamala knows that.”
If the worried wealthy are agitated, it’s understandable; real money is on the line here. But history suggests that major changes are unlikely, at least in the short term. Even if Democrats win big, they will probably face some foot-dragging within their own caucus. As Brian Faler at Politico has pointed out: “In 2021, when Democrats controlled Congress and the White House, they considered increasing the capital gains tax rate to 28.3 percent before dropping the idea.”
Harris herself seems to appreciate the political complexity of taxing capital gains. Progressives love the idea, but even many moderate Democrats are skittish about the prospect. In early September, Harris rather predictably abandoned certain elements of Biden’s plan for capital gains — specifically his suggestion that the rate should nearly double for wealthy taxpayers. Instead, Harris has proposed a more limited (but still significant) increase.
Uncertainties
It’s impossible to make real predictions about the future of federal tax policy when we have so little certainty about the outcome of the election. Every two years, the polls manifest varying levels of accuracy. And systemic polling errors, while common, are no more predictable than election outcomes themselves; some years they favor Republicans and other years Democrats.
The winner of the presidential contest will obviously be pivotal. But so will the outcome on Capitol Hill. Biden’s presidency would have been very different had Republicans managed to retain the Senate in 2020 — and not many people anticipated the Democratic overperformance in Georgia that year.
My money is on a lot of less-than-seismic change, at least when it comes to tax policy. The most likely outcome from the election is some version of divided government, with neither Harris nor Trump leading a clean sweep at the polls. That outcome would probably lead to some sort of TCJA extension. Democrats seem unlikely to make good on their threat to let the individual provisions expire completely; if the polls tell us anything, it’s that Democrats are vulnerable on economic policy.
But I think dramatic tariff changes are probable in the case of a Trump victory. And if most analysts are right, the deleterious political and economic effect of Trump-style tariffs might eclipse other tax issues for the next four years.
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