🚩 Red Flag | Proposed Presidential Policies | TaxGPT's Newsletter

As the 2024 election season unfolds, both Donald Trump and Kamala Harris have introduced tax proposals that reflect their broader economic philosophies. While Trump’s proposals build on his established policies, Harris’s plans signal potential shifts that could significantly impact various sectors. Overshadowing all of these proposals sits the Tax Cuts and Jobs Act of 2017. Under current law, these sweeping changes will sunset at the end of 2025, bringing massive revisions to the tax code. That issue notwithstanding, here’s a comparative analysis of their key tax proposals:

1. Individual Income Taxes

• Trump: Trump’s tax policy emphasizes making the individual income tax cuts from the 2017 Tax Cuts and Jobs Act (TCJA) permanent, ensuring continued relief for taxpayers. He is also considering replacing the personal income tax with increased tariffs, a radical shift that would fundamentally change how Americans are taxed.
• Harris: Harris’s approach to individual income taxes focuses on targeted relief, particularly for service industry workers. Like Trump, she proposes exempting tip income from taxation, which would help millions of workers retain more of their earnings. However, Harris has not suggested a complete overhaul of the income tax system, making her approach more incremental compared to Trump’s potentially sweeping changes.

2. Credits, Deductions, and Exemptions

• Trump: Trump’s expansion of the child tax credit is a notable proposal, with discussions about increasing it to a $5,000 universal credit. This aligns with his broader agenda of supporting families through direct financial relief. Additionally, Trump proposes exempting Social Security benefits from taxation, aiming to improve financial security for retirees.
• Harris: Harris proposes more extensive expansions of various tax credits aimed at supporting low-income families and improving access to affordable healthcare. Her plan includes a significant increase in the child tax credit, with tiered amounts based on the child’s age. She also seeks to expand the Earned Income Tax Credit (EITC) and premium tax credits, making her policy more comprehensive in scope than Trump’s, with a stronger focus on assisting low-income and middle-class families.

3. Business Taxes

• Trump: Trump proposes to lower the corporate income tax rate from 21 percent to 20 percent, continuing his focus on stimulating business investment and economic growth. This aligns with his past policies aimed at reducing the tax burden on corporations to encourage reinvestment and job creation.
• Harris: Harris has yet to announce specific plans for business taxes. This leaves room for speculation, though her previous stance and the Biden-Harris administration's policies might suggest a focus on ensuring that corporations contribute fairly to the economy, potentially through reforms rather than further tax cuts.

4. Estate and Wealth Taxes

• Trump: Trump aims to make the estate tax cuts from the TCJA permanent, ensuring that reduced estate tax rates remain in place, which would benefit wealthier individuals looking to transfer wealth to the next generation.
• Harris: Harris’s stance on estate and wealth taxes remains undefined, leaving it unclear whether she will maintain the current approach or propose changes aimed at increasing taxes on the wealthy.

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5. Housing Tax Incentives

• Trump: Trump has not proposed specific tax policies directly targeting housing.
• Harris: Harris, on the other hand, places a strong emphasis on housing tax incentives, with plans to expand the Low-Income Housing Tax Credit, introduce credits for new homebuyers, and create incentives for the construction of affordable starter homes. This focus on housing affordability marks a significant difference between the two candidates, with Harris prioritizing access to affordable housing as a key component of her tax policy.

6. Excise Taxes

• Trump: Trump has proposed taxing large private university endowments, targeting institutions with significant financial resources.
• Harris: Harris has not yet outlined her plans for excise taxes, so it remains to be seen how her policy might differ from or align with Trump’s approach.

7. Tariffs and Trade

• Trump: Trump’s tariff proposals are aggressive and comprehensive. He plans to impose a universal baseline tariff on all U.S. imports, ranging from 10 percent to 20 percent, with a particularly heavy 60 percent tariff on imports from China. These measures are designed to protect American industries and reduce reliance on foreign goods. Trump is also considering replacing personal income taxes with tariffs, which would be a major shift in the U.S. tax system.
• Harris: Harris has not yet detailed her stance on tariffs and trade, leaving it uncertain whether she would continue the protectionist policies of the Biden-Harris administration or take a different approach.

Donald Trump’s tax proposals build on his established policies, with a clear focus on reducing income and corporate taxes, supporting businesses, and imposing tariffs to protect American industries. Kamala Harris’s proposals, while still in development, suggest a more targeted approach aimed at expanding support for low- and middle-income families, improving housing affordability, and providing relief to service workers. Harris’s plans may continue to evolve, especially as the campaign progresses, but they already indicate a focus on equity and support for those most in need.

While Trump’s policies are more defined, given his history and previous tax reforms, Harris’s approach appears to prioritize expanding and fine-tuning existing tax credits and incentives. The contrast between the two lies in their methods: Trump seeks broad, systemic changes, while Harris aims to provide targeted relief to specific groups.

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