Former President Donald Trump and Vice President Kamala Harris are gearing up for a potentially contentious battle in the upcoming election, with both candidates unveiling their economic agendas. One key issue that is likely to impact millions of Americans is taxes. As the race heats up, it’s important to understand how the tax policies proposed by Trump and Harris could affect your bottom line.
## Trump’s Tax Agenda
Trump has made it clear that he aims to preserve the individual and business tax cuts that were enacted via the Tax Cuts and Jobs Act (TCJA). During a recent event in York, Pennsylvania, he promised “big tax cuts for families and small businesses.” If re-elected, Trump plans to extend the provisions of the TCJA, which include lower federal income tax brackets, a higher standard deduction, a bigger child tax credit, and more generous estate and gift tax exemptions, among others.
While Trump has not directly addressed the issue of TCJA extensions during his campaign, his economic advisor, Lael Brainard, has voiced support for partial extensions. However, there is a caveat – Brainard has stated that the Trump tax cuts for those with incomes above $400,000 should not be extended in the interest of achieving a fairer tax system.
## Harris’s Tax Agenda
On the other side of the aisle, Vice President Kamala Harris has proposed measures to address the budget deficit and raise revenue. One of her key proposals is to increase the corporate tax rate to 28%, up from the 21% rate that was permanently enacted via the TCJA. This plan could potentially reduce the deficit by $1 trillion over a decade, according to estimates from the Committee for a Responsible Federal Budget.
Harris has also announced an economic plan that includes an expanded child tax credit worth up to $6,000 in total tax relief for families with newborn children. This proposal is aimed at providing much-needed support to families facing financial challenges, particularly in the wake of the COVID-19 pandemic.
## Impact on the Budget Deficit
Both candidates have vowed to address the budget deficit, but their approaches differ significantly. While Harris aims to increase the corporate tax rate to generate additional revenue, Trump has called for sweeping tariffs on imported goods. These tariffs could potentially reduce the average after-tax U.S. household income by roughly $1,800 in 2025, according to the Tax Policy Center.
Trump has defended his tariff proposals, arguing that they are a tax on foreign countries rather than American consumers. However, the potential impact on household income cannot be ignored, and voters will need to carefully consider the implications of these proposals on their own financial situations.
## Extending Tax Cuts
The expiration of trillions in tax breaks enacted by Trump via the TCJA is looming, with provisions set to expire after 2025 if no action is taken by Congress. More than 60% of taxpayers could see higher taxes in 2026 without extensions, according to the Tax Foundation. These expiring provisions include not only lower federal income tax brackets and a higher standard deduction but also a bigger child tax credit and more generous estate and gift tax exemptions.
Both parties are likely to agree on extending trillions in tax cuts, but negotiations could be challenging due to concerns about the federal budget deficit. Extending TCJA provisions and subsidized premiums for marketplace health insurance could increase federal deficits by nearly $5 trillion over 10 years, according to the Bipartisan Policy Center.
## Proposed Tax Increases
In addition to preserving tax cuts, Trump has also proposed no taxes on Social Security income. Social Security is a key issue for voters this election, with many expressing concerns about the long-term sustainability of the program. On the other hand, Harris has vowed to increase the corporate tax rate to 28% and has not shied away from proposing measures to raise revenue in order to address the budget deficit.
Both candidates have floated the idea of eliminating income tax on tip income, with Harris announcing her plan in August and Trump following suit shortly after. While this proposal has garnered some bipartisan support, it has also faced criticism from policy experts who question the underlying policy rationale and potential administrative hurdles.
## Conclusion
As the Trump vs. Harris election heats up, it’s clear that taxes will be a key issue for the next president. With trillions in tax breaks set to expire after 2025, both candidates have proposed measures that could significantly impact millions of Americans. From extending tax cuts to raising revenue through increased corporate tax rates and tariffs, the candidates have presented contrasting visions for the future of tax policy in the United States.
Voters will need to carefully consider the implications of these proposals on their own finances and make an informed decision at the ballot box. The outcome of the election will have far-reaching consequences for the tax landscape in the years to come, making it essential for voters to understand the potential impact of each candidate’s tax agenda.