Comparing and Contrasting the Harris and Trump Economic Plans
September 17, 2024
Vice President Kamala Harris’s and Former President Donald Trump’s tax and spending proposals offer distinct approaches to economic policy and deficit management, though both aim to address the deficit and spur growth.
The big picture: Trump and the GOP have endorsed extending his 2017 tax cuts and paying for deficit reduction through growth and tariffs. Harris’s plan builds on the Biden-Harris Administration’s proposals with a mix of spending targeting children, housing, and small business and more punitive taxes on the wealthy.
Trump’s plan focuses on strengthening and expanding the 2017 tax cuts, with the following tweaks:
- Lower the corporate income tax rate from 21% to 20% and lower the corporate income tax rate to 15% for companies that manufacture their products domestically.
- Exempt Social Security and tip income from taxes.
- Impose a 10% to 20% tariff on imported goods and a 60% tariff on goods from China.
- Deregulation, including a pledge for eliminating 10 rules for every new regulation (similar to his previous 2-for-1 deregulation plan).
Trump argues that economic growth, tariffs, and increased government efficiency, including potential measures like ending clean energy subsidies, will offset revenue forfeited by lowering taxes.
- These proposals are projected to increase federal deficits by $5.8 trillion over the next ten years, according to a Penn-Wharton budget model.
Harris’s tax proposals continue President Joe Biden’s policies with some nuances. She has proposed the following changes to the tax code:
- Raise the corporate tax from 21% to 28%.
- Exempt tips from taxes.
- Expand the Child Tax Credit back to COVID-era levels, and introduce a $6,000 tax credit for parents of newborns.
- Offer a $10,000 tax credit for first-time homebuyers, with more assistance given to low-income families and down-payment assistance of up to $25,000 for certain first-time, first-generation homebuyers.
- Introduce a 25% minimum tax on total income for those individuals with over $100 million in wealth, targeting unrealized gains.
- Offer a $50,000 tax-deduction to those individuals starting small businesses, an increase from the current $5,000 tax-deduction.
Harris argues that these changes will help strengthen the middle class, a major focus of the “opportunity economy” which she referenced in the Sept. 10 presidential debate.
- These proposals are expected to increase deficits by up to $ $1.2 trillion over ten years, according to the Penn-Wharton budget model.
Read more here about both candidate’s tax plans in detail here.
The bottom line: Regardless of which party wins the White House and controls Congress this fall, a narrow majority is expected in both the House and Senate. Even in scenarios where one party sweeps control, compromise will likely moderate both candidates’ proposals.
Please contact David McCarthy (dmccarthy@crefc.org) and James Montfort (Jmontfort@crefc.org) with any questions.