Key Points:
- Corporate Tax Rates:
- Trump proposes lowering the corporate tax rate from 21% to 20%, with a 15% rate for domestic manufacturers.
- Harris plans to raise the corporate tax rate from 21% to 28%.
- Tax Exemptions for Tips and Overtime:
- Both Trump and Harris agree on making tips exempt from income taxes.
- Trump also proposes exempting overtime pay from income taxes.
- Child Tax Credit:
- Trump supports the child tax credit but has not committed to expanding it. His running mate, JD Vance, supports raising it to $5,000.
- Harris plans a significant expansion of the child tax credit, offering up to $6,000 for a child’s first year and $3,600 for children aged 2-5.
- Tariffs:
- Trump plans to impose tariffs between 10%-20% on imported goods, with a 60% tariff on imports from China.
- Harris has no tariff-related proposals.
- Small Business Deductions:
- Trump does not have a specific plan for small business deductions.
- Harris proposes increasing the small business startup cost deduction from $5,000 to $50,000.
- Social Security Benefits:
- Trump proposes ending taxes on Social Security benefits.
- Harris does not have a specific proposal regarding Social Security taxes.
- Deficit Impact:
- Trump’s plan is estimated to increase the national deficit by $5.8 trillion over 10 years.
- Harris’ plan is expected to add $1.2 trillion to the deficit over the same period.
- Medicare Tax Increase:
- Harris proposes increasing the Medicare tax from 3.8% to 5% for those earning over $400,000. Trump does not address Medicare taxes.
Trump and Harris Tax Proposals: Key Differences and Similarities in 2024 Election
With the U.S. presidential election fast approaching, candidates are unveiling their economic strategies to sway undecided voters. Former President Donald Trump and Vice President Kamala Harris have each proposed tax plans aimed at supporting various sectors of the economy, from corporate America to working-class families. While their approaches differ significantly in areas like corporate taxes, both candidates agree on specific tax exemptions, including tips for hospitality workers. Here’s a breakdown of the key proposals from each candidate and the potential impact on the federal deficit.
Donald Trump’s Tax Plan: Lower Taxes and Tariffs
Donald Trump has positioned himself as a champion of lower taxes, with a focus on reducing the tax burden for corporations and individuals. His key proposals include:
- Lowering the Corporate Tax Rate: Trump plans to reduce the corporate income tax rate from 21% to 20%, with an even lower rate of 15% for companies that manufacture their products domestically. This is intended to incentivize domestic production and boost job creation.
- Exempting Tips and Overtime from Income Tax: In a bid to support workers in the hospitality and service industries, Trump proposes to make tips and overtime pay exempt from income taxes. This move would particularly benefit hourly workers who rely on tips and extra hours to boost their earnings.
- Eliminating Taxes on Social Security Benefits: Trump also proposes ending taxes on Social Security benefits, a change that would provide financial relief to seniors living on fixed incomes.
- Imposing Tariffs on Imported Goods: To further encourage domestic production, Trump plans to impose tariffs ranging from 10% to 20% on most imported goods. He is particularly focused on goods imported from China, where he proposes a 60% tariff. This move is intended to protect American manufacturing, though critics warn it could lead to higher consumer prices.
- Child Tax Credit: Although Trump supports the child tax credit, he has not explicitly stated plans for expansion. His running mate, Ohio Senator JD Vance, advocates for increasing the credit to $5,000.
Impact on the Federal Deficit: According to the Penn Wharton Budget Model, Trump’s tax and spending plan would increase the national deficit by $5.8 trillion over the next decade. While households across income levels may benefit in the short term, the rising federal debt could pose challenges for future generations.
Kamala Harris’ Tax Plan: A Focus on Families and Small Businesses
Kamala Harris, the Democratic candidate, has proposed a tax plan that emphasizes support for working families and small business owners. Her approach includes raising taxes on corporations and high earners while expanding benefits for lower- and middle-income households. Key elements of Harris’ plan include:
- Raising the Corporate Tax Rate: Harris proposes increasing the corporate income tax rate from 21% to 28%. This change is intended to ensure that corporations contribute more to the federal budget, especially those with high profits.
- Increasing Capital Gains Tax: For individuals earning over $1 million annually, Harris plans to raise the capital gains tax from 20% to 28%. This would primarily affect wealthy investors, with the goal of reducing income inequality.
- Exempting Tips from Income Tax: Like Trump, Harris agrees that tips should not be subject to income tax, benefiting workers in service industries.
- Expanding the Child Tax Credit: Harris has proposed a significant expansion of the child tax credit. Under her plan, families would receive $3,600 per year for children aged 2-5, $3,000 for children 6-17, and $6,000 for the first year of a child’s life. This expansion aims to reduce child poverty and ease the financial burden on working families.
- Small Business Deductions: Harris plans to increase the tax deduction for small business startup costs from $5,000 to $50,000. This is designed to encourage entrepreneurship and support economic growth at the grassroots level.
- Medicare Tax Increase: To fund healthcare programs, Harris proposes raising the Medicare tax from 3.8% to 5% for individuals earning more than $400,000 annually.
Impact on the Federal Deficit: Harris’ tax plan is estimated to increase the national deficit by $1.2 trillion over 10 years, according to the Penn Wharton Budget Model. Low- and middle-income families would benefit from expanded credits and deductions, while wealthier individuals would likely face higher tax burdens.
Shared Ground: Tax Exemption for Tips
Both Trump and Harris agree on the issue of exempting tips from income taxes, a proposal aimed at benefiting hospitality and service workers. This shared position highlights a rare area of consensus between the two candidates in their broader tax strategies.
