Diving into Taxes: Trump vs. Harris Showdown

WASHINGTON — As the 2024 presidential race heats up, tax cuts have emerged as a key issue, especially between former President Donald Trump and Vice President Kamala Harris. With Trump’s 2017 tax law set to expire in 2025, both candidates are shaping their platforms around significant tax proposals amid rising costs for housing, food, and child care.

Trump advocates for extending his tax provisions well beyond their expiration date, emphasizing plans to reduce the corporate tax rate further and eliminate the cap on state and local tax deductions. He insists these changes will bolster federal revenue through substantial tariffs on imports, referring to tariffs as a “beautiful word” during a recent rally in Savannah, Georgia. “We will take in hundreds of billions of dollars into our treasury and use that money to benefit the American citizens,” he asserted.

In contrast, Harris presents an “opportunity economy” plan, promising not to raise taxes on individuals earning less than $400,000 and proposing a new tax on billionaires. She aims to enhance tax deductions and credits for entrepreneurs and first-time homebuyers, and seeks to permanently expand the Child Tax Credit. At a Pittsburgh campaign event, she emphasized, “Under my plan, more than 100 million Americans will get a middle-class tax break.”

The implications of these tax plans have drawn scrutiny from economists who warn of the potential impact on the national deficit. Projections indicate Trump’s plan could add up to $5.8 trillion to the deficit over the next decade, while Harris’ approach might increase it by about $2 trillion. Erica York from the Tax Foundation expressed concerns that both candidates fall short on fiscal responsibility, noting, “Neither of them have really outlined a plan that would get us on a sustainable path.” 

Both candidates propose eliminating taxes on tipped workers, although Harris intends to limit this benefit to service industry employees earning under $75,000. Economists caution that these tax exemptions might not significantly aid low-income workers and could inadvertently reduce available credits.

Additionally, Trump’s suggestion to eliminate taxes on overtime could potentially lead to a substantial loss of revenue, costing up to $6 trillion over ten years if not properly regulated. Concerns about the solvency of Social Security also remain unaddressed, with Trump’s proposal to eliminate taxes on benefits raising alarms among financial analysts. This could exacerbate the program’s projected insolvency by 2035, where recipients are expected to see a 17% reduction in benefits.

On the corporate tax front, Trump seeks to lower the rate to 15%, while Harris aims to raise it to 28%. Experts estimate that Harris’ increase could generate $1 to $1.2 trillion in federal revenue over the next decade. Furthermore, Trump plans to impose tariffs of up to 20% on imports, which could lead to increased costs for consumers, potentially reaching $2,600 per household annually.

Both candidates are also addressing the taxation of capital gains. Harris proposes a higher tax rate on earnings exceeding $1 million and a minimum tax on unrealized capital gains for the wealthiest households, projecting a potential $750 billion in revenue over ten years.

Finally, Trump has committed to removing the cap on state and local tax deductions, a move that could provide significant tax relief to high-income households but cost an estimated $1.2 trillion over a decade. As the campaign unfolds, the focus on tax policy will likely continue to play a pivotal role in shaping voter decisions and economic discussions in the months ahead.