Taxes Unveiled: Donald Trump vs. Kamala Harris Showdown

The 2024 presidential race is now rallying around a pivotal issue: tax cuts. With the expiration of Donald Trump’s 2017 tax law in sight, both Trump and Vice President Kamala Harris are offering starkly different visions for the future of taxation in the United States.

Trump is advocating for an extension of his tax provisions and aims to further reduce corporate tax rates. He intends to lift the cap on state and local tax deductions, arguing that lost federal revenue will be offset by imposing tariffs on imports. “Tariff is a beautiful word,” he remarked during a recent rally in Savannah, Georgia, promising a significant influx of funds to the U.S. treasury to benefit American citizens.

On the other hand, Harris is promoting what she terms an “opportunity economy.” Her platform asserts that there would be no tax increases for individuals earning under $400,000, alongside a “billionaire” tax aimed at wealthier citizens. Additionally, she pledges tax deductions and credits for aspiring entrepreneurs and first-time homebuyers, as well as a permanent expansion of the Child Tax Credit. “More than 100 million Americans will receive a middle-class tax break that includes $6,000 for new parents during their first year,” Harris stated during her campaign speech in Pittsburgh.

Bipartisan collaboration in Congress will be crucial for both candidates to implement their tax policies, although tariffs could be managed unilaterally by the president. Economists are continuously analyzing these proposals, estimating that Trump’s plan could escalate the federal deficit by up to $5.8 trillion over the next decade, while Harris’s proposal might add up to $2 trillion.

Critics, such as Erica York from the Tax Foundation, suggest that neither candidate has sufficiently addressed fiscal responsibility. “Both are likely to have a negative impact on the economy,” she noted, emphasizing the need for sustainable economic growth.

Both candidates have proposed eliminating taxes on tips and overtime. Harris wants to limit these benefits to service industry workers earning less than $75,000, while Trump has not set parameters, raising concerns among economists about potential incentives for more tipped work. Analysts express doubt over whether these tax breaks would genuinely assist low-income earners, as benefits often diminish with lower reported income.

Trump’s ambition to remove taxes on all overtime could cost the nation approximately $1.7 trillion in lost revenue over ten years, according to the Committee for a Responsible Federal Budget. Furthermore, the solvency of Social Security remains a concern among economists. Trump has suggested eliminating taxes on Social Security benefits; however, this move could hasten the program’s insolvency projected for 2035.

In terms of corporate tax policy, Trump plans further reductions, while Harris aims to increase the rate from 21% to 28%. Economic forecasts indicate that if implemented, Harris’s changes could generate $1 trillion to $1.2 trillion in federal revenue, contrasting Trump’s proposal which might decrease revenue significantly.

An additional element is Harris’s proposed billionaire tax, targeting households with assets exceeding $100 million and calculating tax liability based on total net worth. The plan is projected to raise approximately $750 billion over a decade.

Finally, Trump’s commitment to abolish the cap on the state and local tax deduction (SALT) would predominantly benefit high-income earners. The Committee for a Responsible Budget estimates that this modification could cost around $1.2 trillion within ten years.