As the November elections approach, tax policy has emerged as a critical issue for American businesses. The 2017 Tax Cuts and Jobs Act (“TCJA”), enacted during Former President Donald Trump’s presidency, includes several provisions set to expire in 2025, making tax proposals from both candidates particularly relevant.
While the policies of Vice President Kamala Harris and Donald Trump both share some common ground, such as eliminating income tax on tips and expanding the child tax credit, significant differences exist in their tax plans.
The tax policies of Donald Trump and Kamala Harris for the 2024 presidential election present distinct approaches to corporate, individual, and trade taxes. Here is how their policies compare.
Corporate Tax Rates
Kamala Harris: Proposes raising the corporate tax rate from 21% to 28%, aligning with previous proposals by President Biden.
Donald Trump: Suggests reducing the corporate tax rate to between 15% and 20%, specifically incentivizing companies that manufacture domestically.
Individual Income Taxes
Kamala Harris: Plans to increase the top individual income tax rate from 37% to 39.6% for individuals earning more than $400,000, while ensuring no tax increases for those earning less.
Donald Trump: Aims to make the individual tax cuts from the TCJA permanent, which would benefit higher-income earners more significantly.
Capital Gains Taxes
Kamala Harris: Supports raising the capital gains tax rate to 33% for individuals earning over $1 million annually, including a new tax on unrealized capital gains for those with a net worth over $100 million.
Donald Trump: Has not proposed specific changes to capital gains taxes.
Child Tax Credit
Kamala Harris: Proposes increasing the child tax credit significantly, offering $3,600 for children aged 0-5 and $3,000 for children aged 6-17.
Donald Trump: Supports maintaining the current child tax credit at $2,000 per child but has not detailed plans for expansion.
Trade and Tariffs
Kamala Harris: The Biden-Harris administration has implemented tariffs on specific imports such as electric vehicles and certain raw materials, aiming to raise revenue without significantly impacting household incomes.
Donald Trump: Proposes a universal baseline tariff on all imports between 10% and 20%, with a specific 60% tariff on imports from China, which could reduce after-tax incomes for American households.
Other Proposals
Both candidates agree on exempting tips from income taxation to support hospitality workers.
Kamala Harris: Plans to increase deductions for small business startups and provide down payment assistance for first-time homebuyers.
Donald Trump: Proposes exempting Social Security benefits and overtime pay from taxation.
These proposals reflect differing priorities in terms of economic growth, income distribution, and fiscal policy impacts. Both candidates’ plans are projected to increase the national deficit over the next decade, with varying effects on different income groups.
Photo Credits: BBC News
The information contained in this post is merely for informative purposes and does not constitute tax advice. For more information, feel free to reach us at [email protected]
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