Tax Policies Shape 2024 Presidential Campaign
How Tax Policies from Trump and Harris Could Reshape the U.S. Economy in the 2024 Presidential Election
As the 2024 presidential campaign unfolds, tax policy has emerged as a key topic of debate. With early voting already underway in several states, voters are eager for clarity on how the candidates’ tax proposals will shape their financial future. While both candidates have laid out some elements of their tax plans, more details continue to emerge. Here’s a breakdown of some notable tax proposals from former President Donald Trump and Vice President Kamala Harris.
Tax Cuts and Jobs Act (TCJA)
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- Trump: Supports making the individual and estate tax cuts permanent and proposes further cuts, though without specifics.
- Harris: Opposes the TCJA but supports not raising taxes on individuals earning less than $400,000. She backs increasing the marginal tax rate to 39.6% for high earners and raising other taxes on high-income earners.
Business Taxes
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- Trump: Proposes lowering the corporate tax rate to 20% or less for U.S.-based production and eliminating the 15% corporate alternative minimum tax (CAMT).
- Harris: Plans to raise the corporate tax rate to 28%, increase the CAMT to 21%, and quadruple the 1% excise tax on corporate stock buybacks. She also aims to increase the small business startup deduction from $5,000 to $50,000, with flexibility in how it is applied.
Individual Income Taxes
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- Trump: Proposes eliminating income and payroll taxes on tips for restaurant and hospitality workers, exempting overtime pay from taxation, and excluding Social Security benefits from taxation. Experts warn these policies could lead to wage reductions for tipped workers and reclassification of salaried employees as hourly to exploit overtime exemptions.
- Harris: Proposes exempting tips from income taxes with safeguards to prevent high earners from avoiding taxes by classifying bonuses as tips.
Child Tax Credit (CTC)
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- Trump: His running mate, J.D. Vance, proposed a $5,000-per-child CTC, but Trump has not explicitly endorsed it.
- Harris: Proposes increasing the CTC to $3,600 for children under six ($6,000 for the first year of life) and expanding the Earned Income Tax Credit and health premium tax credits.
Capital Gains
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- Harris: Proposes a 25% tax on income and unrealized capital gains for individuals with a net worth over $100 million and taxing capital gains at ordinary income rates for those earning over $1 million annually. Unrealized gains at death would also be taxed, with exemptions of $5 million for individuals and $10 million for married couples.
Housing
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- Trump: Hints at first-time homebuyer tax incentives and higher tariffs on imports.
- Harris: Advocates for down-payment assistance and housing incentives for first-generation homeowners.
Tariffs
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- Trump: Advocates for higher tariffs on U.S. imports, proposing a baseline of 10% and 60% on imports from China, with some imported cars facing a 100% tariff. He has suggested replacing income taxes with revenue from tariffs. Critics argue this would result in a significant tax increase through higher prices, particularly affecting low-income Americans who don’t pay federal income taxes.
The Bottom Line
As the campaigns progress, both candidates will likely continue to refine and expand their tax proposals. However, the fate of these plans depends heavily on Congress, as any tax bill must be passed before it can be signed into law. Voters should stay informed as the debate over tax policy evolves.
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