the issues: taxes
At onthefenceusa.com, we have posted dozens essays that provide a variety of subjective perspectives on evaluating elections. These essays are designed to encourage thoughtful reflection on different aspects of voting and political decision-making. In the coming weeks, we will begin a detailed analysis of the key issues facing our country, alongside an in-depth look at the two main candidates, assessing their qualifications and ability to lead the nation effectively. First, we tackle each candidate’s tax stance:
In the 2024 presidential election, both Kamala Harris and Donald Trump are expected to present different tax policies, reflecting their distinct political and economic priorities. To offer a factual comparison, we will explore each candidate's positions and proposals on taxes based on their public statements, prior policies, and historical actions.
Kamala Harris' Tax Plans
As the current vice president and a member of the Democratic Party, Kamala Harris supports tax policies that emphasize wealth redistribution, economic equality, and support for middle- and lower-income families. These policies largely align with the Biden administration's broader tax strategy, which Harris has been a part of.
Corporate and High-Income Tax Increases: Harris has voiced support for increasing taxes on corporations and wealthy individuals. The Biden administration has proposed raising the corporate tax rate from 21% to 28% to help fund infrastructure projects and social programs. Additionally, there is an emphasis on ensuring that individuals making over $400,000 per year pay a higher marginal tax rate.
Capital Gains and Wealth Taxes: One significant proposal under Harris and the Biden administration is to increase capital gains taxes for the wealthiest Americans. The proposal aims to treat capital gains (profits from the sale of assets like stocks) at the same rate as ordinary income for individuals earning over $1 million annually. This would raise the current top capital gains rate from 20% to 39.6%. The goal is to close tax loopholes that benefit the rich, reducing the disparity between income from labor and capital.
Support for Middle-Class Families: Harris has promoted expanding tax credits for middle-class families. The Biden-Harris administration already increased the Child Tax Credit, which provided families with monthly payments, and has advocated for making these expansions permanent. The Earned Income Tax Credit (EITC), which benefits lower-income workers, is also likely to see continued support in her tax agenda.
International Taxation: Harris supports efforts to prevent large multinational corporations from shifting profits to low-tax countries. She aligns with the Biden administration’s goal of creating a global minimum tax to ensure that corporations pay at least a certain level of taxes no matter where they operate. This approach aims to curb tax avoidance and ensure that multinational corporations contribute their fair share of taxes.
Donald Trump's Tax Plans
Former President Donald Trump’s tax plans for the 2024 election draw on the policies he implemented during his first term, particularly the 2017 Tax Cuts and Jobs Act (TCJA), and his consistent calls for tax cuts as a means to boost economic growth.
Continuation of Tax Cuts: Trump's 2017 tax overhaul is a key feature of his economic legacy. The TCJA reduced the corporate tax rate from 35% to 21% and lowered individual tax rates across various brackets. Trump has signaled a desire to make the individual tax cuts permanent, as many provisions of the TCJA are set to expire in 2025. The cuts provided benefits to businesses and individuals, though critics argue that they disproportionately helped the wealthy.
Further Corporate Tax Reductions: Trump has suggested that he would lower the corporate tax rate even further, potentially down to 15%, to attract business investment and spur job creation. His focus remains on supply-side economics, which posits that lowering taxes on businesses will lead to more investment, growth, and employment opportunities.
Capital Gains Tax Reductions: In contrast to Harris' approach, Trump has advocated for reducing the capital gains tax to encourage investment in stocks and real estate. He has floated the idea of lowering the capital gains tax rate and indexing capital gains for inflation. This would mean investors could deduct the effect of inflation when calculating their tax liabilities on asset sales, reducing the tax burden on profits from long-term investments.
No New Taxes on Wealthy Individuals: Trump opposes increasing taxes on wealthy individuals and has consistently rejected the notion of a wealth tax or raising the marginal tax rate for high-income earners. His administration's policies favored tax cuts for individuals across the board, but the wealthy received the most substantial benefits, especially from the lower rates on income and investment profits.
Simplification of the Tax Code: One of Trump's goals during his presidency was to simplify the tax code, which he claims was partially achieved by reducing the number of tax brackets and doubling the standard deduction. His future plans likely include further simplification efforts to reduce the complexity and length of tax filings.
Key Differences
Tax Burden on the Wealthy: Harris supports increasing taxes on wealthy individuals and corporations, while Trump seeks to maintain or reduce the tax burden for these groups.
Corporate Taxes: Harris favors raising the corporate tax rate to 28%, while Trump wants to reduce it further, possibly to 15%.
Capital Gains: Harris wants to tax capital gains as ordinary income for those earning over $1 million, whereas Trump advocates reducing the capital gains tax to spur investment.
Middle-Class Support: Harris emphasizes expanding tax credits for middle- and lower-income families, such as the Child Tax Credit and EITC. Trump's focus is on maintaining lower income tax rates across the board, which he argues supports all taxpayers but critics note benefits the wealthy more.
International Tax Strategy: Harris backs a global minimum tax to curb corporate tax avoidance, while Trump has not prioritized such global tax reforms, focusing instead on domestic tax reductions.
Kamala Harris and Donald Trump represent sharply contrasting approaches to tax policy. Harris prioritizes tax increases on the wealthy and corporations to fund social programs and reduce income inequality, while Trump focuses on tax cuts to stimulate investment and economic growth, particularly through lower corporate and capital gains taxes. These divergent strategies reflect their broader economic philosophies, with Harris promoting more government intervention and redistribution, and Trump advocating for a smaller government role in economic management. Voters' choices between these policies will depend on their views about the role of taxes in promoting economic equity or growth.