This is one in a series of States Newsroom reports on the major policy issues in the presidential race.
Ashley Murray
WASHINGTON — As former President Donald Trump’s 2017 tax law nears expiration and Americans face rising costs in housing, food, and child care, tax cuts dominate the 2024 presidential contest between Trump and Vice President Kamala Harris.
Trump aims to extend his tax provisions past their 2025 expiration, further lowering the corporate tax rate and lifting the state and local tax deduction cap. He plans to offset federal revenue loss by imposing steep tariffs on imported goods. “Tariff is a ‘beautiful word,’” he told a crowd in Savannah, Georgia.
Harris campaigns on an “opportunity economy” platform, promising no tax increases for those earning under $400,000, implementing a “billionaire” tax, offering deductions for entrepreneurs, and permanently expanding the Child Tax Credit. “Under my plan, more than 100 million Americans will get a middle-class tax break,” Harris said in Pittsburgh, Pennsylvania.
The next president will need Congress to enact these policies, except for tariffs, where the president has wide latitude.
What would it cost?
Economists are analyzing the fiscal impact of these tax cut promises. Trump’s plan could add up to $5.8 trillion to the deficit over 10 years, while Harris’ plan may increase the deficit by up to $2 trillion, according to the Penn Wharton Budget Model. “Neither candidate has outlined a plan to achieve fiscal responsibility,” said Erica York from the Tax Foundation.
Promise: No taxes on tips, overtime
Trump and Harris have both proposed eliminating taxes on tipped workers, though Harris limits this to those earning under $75,000 in service industries. Economists warn that these plans might reduce benefits from the Child Tax Credit and Earned Income Tax Credit for low-income workers. The Committee for a Responsible Federal Budget estimates eliminating overtime taxes could cost $1.7 trillion over 10 years.
Promise: No taxes on Social Security
Trump has suggested eliminating taxes on Social Security benefits, currently paid by higher-income recipients. Economists warn this could hasten the fund’s insolvency by one year. Trump has also not addressed the looming depletion of the Social Security fund by 2035.
Promise: New corporate tax rates and tariffs
Trump’s 2017 Tax Cuts and Jobs Act lowered the corporate tax rate to 21%. Harris plans to raise it to 28%, potentially generating $1 trillion in revenue over a decade. Trump proposes reducing it further to 15%, which could reduce revenue by up to $673 billion. He also plans to impose tariffs up to 60% on Chinese goods, which could cost American households $2,600 annually.
Promise: A billionaire tax
Harris and the Biden administration advocate for billionaires to pay their “fair share” with higher taxes on long-term capital gains and a minimum tax on unrealized capital gains for high earners. This could raise $750 billion over ten years, according to the Committee for a Responsible Federal Budget.
Promise: No SALT cap
Trump intends to eliminate the $10,000 cap on state and local tax deductions, benefiting higher-income taxpayers. The Tax Policy Center estimates this could cut taxes by $140,000 for the top 0.1% of earners. The Committee for a Responsible Budget warns it could cost $1.2 trillion over ten years.
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