In a bold move to reshape the federal government, the Heritage Foundation launched "Project 2025" in 2022, a comprehensive policy collection that provides recommendations for the next presidential administration. President Joe Biden and Democrats have characterized the initiative as a preview of a potential second term from former President Donald Trump. However, Trump himself has distanced himself from the mandate, stating that he knows nothing about "Project 2025" and had no involvement with it.

Despite Trump's denial, several former Trump officials have been directly associated with Project 2025, and Trump even praised the Heritage Foundation in a video from April 2022. The organization, though unable to provide a statement, clarified that Project 2025 does not speak for any candidate or campaign but is a coalition of conservative groups advocating policy and personnel recommendations for the next conservative president.

One of the key areas of focus in Project 2025 is tax reform. The plan aims to promote economic prosperity by reducing marginal tax rates, broadening the tax base, and lowering the cost of capital. It proposes a departure from the current federal income tax brackets and suggests implementing a simple two-rate individual tax system with flat rates of 15% and 30%. The higher rate would begin around the Social Security wage base of $168,600 for 2024.

Under this proposal, taxpayers could expect to either pay more or less in federal income taxes, depending on their current tax bracket. The plan also seeks to eliminate most deductions, credits, and exclusions, including tax breaks for state and local taxes and education. However, it is worth noting that the majority of American taxpayers already claim the standard deduction, making itemized deductions less relevant for them.

Additionally, Project 2025 contemplates implementing a consumption tax, such as a national sales tax or a business transfer tax, as part of fundamental reform. However, the enactment of these policies may face significant challenges in Congress.

Another significant aspect of the proposed plan is the reduction of taxes on investment income for higher earners. It suggests lower taxes on capital gains and qualified dividends, setting the rate at 15% compared to the current top rate of 20%. Furthermore, Project 2025 aims to abolish the net investment income tax (NIIT), which imposes an additional 3.8% levy on assets for higher-income individuals.

Estate and gift taxes are also under scrutiny in Project 2025. The plan advocates for making the 2017 Tax Cuts and Jobs Act changes permanent, while simultaneously reducing the estate and gift tax rate to a maximum of 20%, down from the current rate of 40%. These changes would benefit a small fraction of taxpayers subject to estate tax, providing potential relief to their heirs.

Trade policies, particularly tariffs, also form part of the debate within Project 2025. Former White House trade advisor Peter Navarro supports U.S. tariffs, while Competitive Enterprise Institute President Kent Lassman argues for lowering or repealing tariffs to make American goods more affordable.

In addition to tax reforms, Project 2025 proposes changes to the Internal Revenue Service (IRS) to reduce its intrusiveness and increase accountability. If these plans are implemented, they could have direct impacts on taxpayers, though the specifics of these changes are not specified in the information provided.

While Project 2025 presents a sweeping vision for the future of the federal government, it is important to note that many of the proposed tax policies would require legislative action, which could prove challenging without Republican control of Congress. Thus, the fate of these ambitious reforms remains uncertain.