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Harris vs Trump Tax Policy

by
Christian Collins
on
9/16/2024
Harris vs Trump Tax Policy

With the 2024 presidential election approaching, tax policy remains a major concern for voters. Both Vice President Kamala Harris and former President Donald Trump have put forward distinct tax proposals that reflect their broader economic visions for the country. Let us delve into the main components of Harris' and Trump's tax plans, their potential impacts, and the underlying principles guiding them.

Summary of Vice President Kamala Harris’ Proposed Tax Policy

Vice President Kamala Harris's 2024 tax proposals focus on reducing economic inequality and providing targeted support to low- and middle-income Americans. Key aspects of her plan include:

Billionaire Minimum Tax: Harris proposes a minimum tax on unrealized capital gains for individuals with a net worth exceeding $100 million. This "Billionaire Minimum Tax" aims to tax wealth that would otherwise go untaxed until assets are sold. (Tax Foundation)

Expansion of the Child Tax Credit (CTC) and Earned Income Tax Credit (EITC): Harris aims to extend the enhancements to the CTC and EITC introduced by the American Rescue Plan Act (ARPA). The plan would increase the CTC to $3,600 for children under five and $3,000 for those over five, with an additional $2,400 for infants. This effort is geared toward reducing child poverty and supporting working families. (Penn Wharton Budget Model)

Increase in the Corporate Tax Rate: Harris suggests raising the corporate tax rate from 21% to 28%, partially reversing the cuts made by Trump’s 2017 Tax Cuts and Jobs Act (TCJA). The goal is to generate additional revenue to fund expanded social programs and ensure that corporations contribute a fair share to government revenues. (Penn Wharton Budget Model)

Permanently Enhanced Premium Tax Credits: The proposal seeks to make the increased premium tax credits under the Affordable Care Act (ACA) permanent, reducing the percentage of household income that middle-income families need to spend on healthcare premiums. (Penn Wharton Budget Model)

First-Time Homebuyer Assistance: Harris proposes offering up to $25,000 in down payment assistance for eligible first-time homebuyers to address the growing issue of housing affordability. (Penn Wharton Budget Model)

Summary of Former President Donald Trump’s Proposed Tax Policy

Former President Donald Trump’s tax plan for 2024 seeks to build on the foundation laid during his presidency, emphasizing tax cuts, economic growth, and deregulation. Key components of his plan include:

Continuation and Expansion of TCJA Provisions: Trump plans to extend the personal tax cuts introduced by the TCJA, which are set to expire in 2025. These cuts reduced rates across all income brackets, increased the standard deduction, and doubled the child tax credit. Trump's proposal aims to make these changes permanent, arguing that they spur economic growth and increase disposable income for American families. (Tax Foundation)

Middle-Class Tax Cuts 2.0: Trump has introduced a "Tax Cuts 2.0" initiative to further lower income tax rates for middle-class families and small businesses, reducing the 22% rate to 15% and making additional middle-class tax relief measures permanent.

Capital Gains Tax Cuts: Another proposal includes lowering the capital gains tax rate, potentially indexing it to inflation. This change would primarily benefit wealthier individuals and investors, but Trump argues it would encourage investment and economic growth. (Tax Foundation)

Payroll Tax Cuts: Trump has suggested a possible reduction in payroll taxes to increase take-home pay for workers. However, specifics are not provided, and such a cut could reduce funding for Social Security and Medicare.

Comparative Analysis of Kamala Harris and Donald Trump’s Proposed Tax Policies

Philosophical Approach:

Harris’ Approach: Harris’ tax plan is rooted in a progressive ideology that emphasizes wealth redistribution and support for low- and middle-income families. Her proposals to expand the CTC and EITC and increase corporate taxes are intended to directly address income inequality and fund social programs.

Trump’s Approach: Trump's plan takes a conservative approach, focusing on tax cuts, economic growth, and deregulation. He argues that lowering taxes will boost the economy by creating jobs and raising wages.

Impact on Different Income Groups:

Harris’s Policy Impact: Harris' plan would most benefit low- and middle-income families through expanded tax credits and social support programs. However, the Penn Wharton Budget Model estimates it could result in a $1.2 trillion increase in the federal deficit over the next decade. (Penn Wharton Budget Model)

Trump’s Policy Impact: Trump's tax proposals are expected to mainly benefit higher-income households and corporations, particularly through capital gains tax cuts and the continuation of TCJA provisions. While supporters believe these measures will drive overall economic growth, critics warn they could worsen income inequality and lead to cuts in social programs to offset lost revenue. (Tax Foundation)

Fiscal Implications:

Harris’ Fiscal Impact: Harris’ proposed tax increases on corporations and the wealthy are intended to help cover the costs of expanded social programs. However, without additional balancing measures, the overall impact could still significantly increase the national deficit. (Penn Wharton Budget Model)

Trump’s Fiscal Impact: Extending and expanding tax cuts without corresponding reductions in spending or new revenue sources could significantly increase the deficit under Trump’s plan. The extent of this impact would depend on the level of economic growth achieved and any potential cuts in spending. (Tax Foundation)

Conclusion

Kamala Harris and Donald Trump offer sharply contrasting visions for the future of U.S. tax policy. Harris supports a progressive agenda focused on reducing inequality and assisting lower-income families, funded by higher taxes on wealthy individuals and corporations. In contrast, Trump advocates for tax cuts and economic growth, primarily benefiting higher-income groups and businesses.

Voters will need to weigh these different approaches and decide which aligns more closely with their values and financial goals. Both plans have significant implications for federal revenue, social programs, and the broader economy.

If you're facing tax debt or need guidance on complex tax policies, Priority Tax Relief can help. Our team of experienced professionals can assist you with options like tax relief programs, penalty abatement, installment agreements, and more. Take control of your financial future—contact Priority Tax Relief for a free consultation to manage your tax obligations effectively.

Feature Image Credit: Kevin Dietsch/Getty Images

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Christian Collins

Christian Collins

Priority Tax Relief
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California

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