Harris, Trump tax-cut promises make 2024 a season of giving
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Dueling tax-cut promises by Kamala Harris and Donald Trump have made the 2024 campaign a season of giving, with each candidate trying to make Election Day feel like Christmas morning.
Why it matters: If you're an investor, a hospitality worker, a retiree, a parent with young children, or a corporation or small business, at least one presidential candidate has a little something — or a big something — for you.
- Neither campaign is paying much heed to how much all these proposals could cost.
- Both would add trillions of dollars to the national debt. Trump's plans would cost two to four times as much as Harris' over 10 years.
- That means both campaigns almost certainly want to write checks that Congress won't cash.
Driving the news: Trump used a speech at the Economic Club of New York last week to unveil his latest tax proposal — a 15% corporate rate for manufacturers that produce their goods with American workers.
- But Harris is making it clear that she's not going to cede the entire tax-cutting debate to Trump.
- Like Trump, she's for eliminating taxes on tips, but her proposal is more limited and would cost roughly half as much.
- And for families with young children, homebuyers and small business owners, she's offering more generous terms than Trump.
Zoom out: In the last few presidential cycles Republicans have promised to cut everyone's taxes, but their proposals have particularly benefited the wealthy.
- Democrats have countered by explaining who they won't raise taxes on.
- Before dropping out of the race — and in the 2020 campaign — President Biden insisted he wouldn't raise taxes on individuals making less than $400,000 a year. Harris, who took Biden's place as the Democratic nominee, has said the same.
Zoom in: Harris has paired her promise of higher taxes for the wealthy with a suite of tax cuts for the middle class.
1. For families with young children, Harris wants to offer an expanded child tax credit that would be worth up to $6,000 per child each year. (Cost: $1.2 trillion over 10 years, according to the Committee for a Responsible Federal Budget.)
2. For first-time homebuyers, she's promising a $25,000 tax credit, a substantial increase on Biden's $10,000 offer. (Cost: $100 billion.)
3. And for small business start-ups, she's proposed a ten-fold increase in the deduction they can claim, from $5,000 to $50,000. (Cost: unknown.)
4. On capital gains she's breaking with Biden, calling for a 28% rate, much lower than Biden's 39.6% proposal. The current rate is 20%. (The Harris plan would raise $190 billion less than Biden's.)
The other side: Trump is offering a series of sweeping tax cuts, as well as targeted ones.
1. He'd extend his 2017 individual tax cuts (Cost: $3.3 trillion to $4 .6 trillion.)
2. He wants to eliminate the taxes seniors pay on their Social Security benefits. (Cost: $1.6 trillion to $1.8 trillion.)
3. He's seeking to lower the corporate rate from 21% to 15%. (Cost: $600 billion.)
4. No taxes on tips. (Cost: $250 billion; Harris has proposed a similar plan.)
Between the lines: Harris has adopted some of Trump's proposals but isn't chasing all of his corporate plans.
- She's calling for a 28% corporate rate, not 15%. Before Trump's 2017 Tax Cut and Jobs Act (TJCA) the rate was 35%.
The bottom line: For all the talk of tax cuts in 2024, individual tax rates will automatically increase in 2026 if Congress and the White House can't reach an agreement in 2025.
- That's because Trump didn't make individual tax cuts permanent in his 2017 TJCA.
- And while most corporate rates are permanent, both parties are open to debating that rate as well, making next year an open bazaar on tax policies and priorities.
