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With the 2024 presidential election on the horizon, tax policy continues to be a significant concern for the electorate. Both Vice President Kamala Harris and former President Donald Trump have presented unique tax policy initiatives that align with their overall economic perspectives for the nation. This analysis examines the main features of Harris’s and Trump’s tax proposals, their possible effects, and the ideological foundations that influence them.
Overview of Vice President Kamala Harris’s Proposed Tax Policy
Vice President Kamala Harris’s tax policy initiatives for 2024 are designed to tackle economic disparities and offer specific assistance to Americans with low and middle incomes. Below are the key elements of her strategy:
Billionaire Minimum Tax: Harris suggests implementing a minimum tax on unrealized capital gains for individuals whose net worth surpasses $100 million. This "Billionaire Minimum Tax" is designed to address the wealth accumulation of the extremely wealthy by taxing income that remains untaxed until assets are sold. (Tax Foundation)
Expansion of the Child Tax Credit (CTC) and Earned Income Tax Credit (EITC): Harris’s proposal aims to solidify the enhancements to the Child Tax Credit (CTC) and Earned Income Tax Credit (EITC) that were first established by the American Rescue Plan Act (ARPA). The CTC would rise to $3,600 for each child under the age of five and $3,000 for those over five, with an extra $2,400 designated for infants. This initiative is part of a wider effort to alleviate child poverty and assist working families. (Penn Wharton Budget Model)
Corporate Tax Rate Increase: Harris suggests increasing the corporate tax rate from 21% to 28%, which would partially undo the tax reductions implemented by Trump’s 2017 Tax Cuts and Jobs Act (TCJA). The aim is to create extra revenue to support enhanced social programs while guaranteeing that corporations pay a more equitable share of government taxes. (Penn Wharton Budget Model)
Permanently Enhanced Premium Tax Credits: The plan suggests making the increased premium tax credits for the Affordable Care Act (ACA) a permanent feature, thereby assisting middle-income families in affording healthcare by lowering the proportion of their household income needed for premium costs. (Penn Wharton Budget Model)
First-Time Homebuyer Assistance: Harris also recommends providing up to $25,000 in down payment assistance for qualifying first-time homebuyers, with the goal of tackling the growing affordability challenges in the housing market. (Penn Wharton Budget Model)
Overview of former President Donald Trump’s Proposed Tax Policy
Former President Donald Trump’s suggested tax strategy for 2024 aims to maintain the structure set up during his time in office, prioritizing tax reductions, economic expansion, and the easing of regulations. Important components consist of:
Continuation and Expansion of TCJA Provisions: Trump intends to prolong the personal tax reductions established by the TCJA, which are scheduled to lapse in 2025. The TCJA reduced tax rates for every income level, raised the standard deduction, and doubled the child tax credit. Trump’s plan aims to make these reductions permanent, contending that they promote economic expansion and enhance disposable income for American families. (Tax Foundation)
Middle-Class Tax Cuts 2.0: Trump has proposed a "Tax Cuts 2.0" initiative aimed at further decreasing income tax rates for middle-class households and small enterprises. This plan involves cutting the 22% tax rate down to 15% and permanently enacting additional tax relief measures for the middle class.
Capital Gains Tax Cuts: An alternative suggestion involves lowering the capital gains tax rate, possibly adjusting it for inflation, which would mainly advantage wealthier individuals and investors. Trump contends that this modification would encourage investment and stimulate economic growth. (Tax Foundation)
Payroll Tax Cuts: Trump has suggested the possibility of reducing payroll taxes to increase the amount of money that workers receive directly. Although specifics are lacking, this initiative would seek to enhance employees’ net pay, though it could potentially lead to decreased funding for Social Security and Medicare.
Comparative Analysis on Kamala Harris and Donald Trump Proposed Tax Policy
1. Philosophical Approach:
- Harris’s Tax Policy: Grounded in a forward-thinking ideology, Harris’s tax initiatives emphasize the redistribution of wealth and offer specific assistance to lower- and middle-income families in the U.S. The suggested enhancements to the Child Tax Credit (CTC) and Earned Income Tax Credit (EITC), along with higher taxes on corporations, are designed to address income disparities directly and finance social programs.
- Trump’s Tax Policy: Trump’s strategy is essentially conservative, emphasizing tax reductions, economic expansion, and the removal of regulations. His initiatives aim to invigorate the economy by lowering taxes, which he contends will generate employment opportunities and boost salaries. Nonetheless, detractors claim that these advantages are primarily favored by wealthier individuals and corporations.
2. Impact on Different Income Groups:
- Harris’s Policy Impact: According to Harris’s proposal, families with low and moderate incomes would gain the most from enhanced tax credits and social assistance. The initiatives are designed to alleviate poverty and economic inequality; however, the Penn Wharton Budget Model estimates that they could lead to a $1.2 trillion increase in the federal deficit over the next ten years. (Penn Wharton Budget Model)
- Trump’s Policy Impact: Trump’s tax initiatives would mainly advantage affluent households and corporations, particularly via reductions in capital gains taxes and the continuation of provisions from the Tax Cuts and Jobs Act (TCJA). Although proponents argue that these measures will foster overall economic expansion, detractors warn that they might exacerbate income inequality and result in reductions to social programs to compensate for lost revenue. (Tax Foundation)(Tax Foundation)
3. Fiscal Implications
- Harris’s Fiscal Impact: Harris’s suggested tax hikes on businesses and affluent individuals aim to help cover the expenses of enhanced social programs. Nevertheless, the overall effect might still lead to a considerable rise in the national deficit unless further measures are implemented to balance it. (Penn Wharton Budget Model)
- Trump’s Fiscal Impact: By prolonging and enlarging tax reductions without matching decreases in spending or increases in revenue, Trump’s plans could significantly increase the deficit, though this would rely on the level of economic growth attained and any possible corresponding cuts in spending. (Tax Foundation)
Conclusion
Kamala Harris and Donald Trump present distinctly contrasting ideas for the future of tax policy in the United States. Harris advocates for a progressive agenda aimed at diminishing inequality and aiding lower-income families, which would be financed through increased taxes on affluent individuals and corporations. Conversely, Trump focuses on tax reductions and fostering economic growth, primarily benefiting high-income households and businesses.
Voters will need to evaluate these opposing perspectives and determine which strategy resonates more with their values and financial interests. Both proposals carry important consequences for federal revenue, social welfare initiatives, and the overall economy.
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