The Next Presidential Administration: A Tax Policy Showdown Between Kamala Harris and Donald Trump

As the next presidential election approaches, tax policy is emerging as a cornerstone issue that will inevitably capture the attention of voters, regardless of whether Vice President Kamala Harris or former President Donald Trump secures the White House. One of the driving forces behind this urgency is the impending expiration of the Trump-era Tax Cuts and Jobs Act of 2017 in 2025. If Congress takes no action, projections indicate that approximately 62 percent of American tax filers could face tax increases (as reported by the Tax Foundation). This looming deadline creates a fertile ground for debate, analysis, and strategic policymaking as the presidency becomes a platform for tax reform.

The Tax Reform Landscape

The next administration will face a critical decision: what aspects of the current tax code to maintain, what to alter, and what to let phase out. Experts, such as Garrett Watson from the Tax Foundation, highlight the obstacles posed by a potentially divided Congress, suggesting that an interim measure may be the best we can hope for if bipartisan agreement cannot be achieved. “It’s an open question to what extent Congress can collaborate on some sort of deal,” Watson notes. With tax reform serving as a catalyst for broader economic discussions, both candidates will prioritize their tax proposals, which promise to impact the financial lives of millions of Americans.

For Trump, potential policies may include allowing itemized deductions for auto loan interest and exempting Social Security benefits from income taxes. Harris, on the other hand, is likely to advocate for expanded tax credits for families and first-time homebuyers while restructuring capital gains and income taxes for the wealthiest individuals.

Tax Policy Priorities: A Matter of Perspective

Despite many voters prioritizing jobs and inflation over tax reform—only about 5 percent deeming it their top economic issue (per Bankrate‘s Politics and Economy Survey)—the economic implications of Harris’ or Trump’s tax plans could have a significant impact on household budgets. According to the nonpartisan Institute for Taxation and Economic Policy, Harris’ policies are projected to lower taxes for all income groups except the top 1 percent, while Trump’s revisions could raise taxes for all groups except the top 5 percent.

Key Divergences in Tax Policy

Let’s explore the four main pillars of their tax policies:

1. Income Tax Structure

Harris has outlined plans to raise income tax rates for high-income earners, proposing an increase in the top tax rate from 37% to 39.6% for single filers earning above $400,000 and joint filers above $450,000. Meanwhile, Trump seeks to make the tax cuts from the 2017 law permanent and eliminate the $10,000 cap on State and Local Tax (SALT) deductions.

According to tax expert Mark Luscombe, “Trump is proposing tax cuts for everybody; Harris is trying to gear her tax cuts more toward the middle class while raising taxes on higher-income taxpayers.”

2. Capital Gains Tax

When it comes to investment profits, Harris supports increasing long-term capital gains taxes to 28% for those making more than $1 million a year, departing from Trump’s previous position of lowering capital gains taxes. Harris also aims to adjust the net investment income tax (NIIT), increasing it to 5% from 3.8% for individuals earning over $400,000.

3. Tax Credits and Breaks

Harris has shown a commitment to enhancing existing tax credits like the Child Tax Credit (CTC) and the Earned Income Tax Credit (EITC). She plans to raise the CTC to as much as $6,000 for young children and even introduced a $25,000 tax credit for first-time homebuyers. Trump’s policies have involved expanding the CTC but have lacked detailed proposals beyond general tax cuts. He has suggested new tax breaks such as deducting auto loan interest payments.

4. Tariffs and Trade

An area where the candidates drastically differ is their stance on tariffs. Trump has advocated for a universal 20% tariff on all imports, asserting that such measures would motivate manufacturers to establish production within the U.S. Harris, while aligned with some of the Biden administration’s trade strategies, has not proposed new tariffs, reflecting a potentially more cautious approach to trade policy.

Congressional Challenges and Future Outlook

Regardless of which candidate assumes the presidency, both face challenges stemming from the existing budget deficits and federal debt concerns. Analysts suggest that neither candidate’s ambitious tax plans—Harris potentially increasing debt by nearly $4 trillion and Trump exacerbating it by $8 trillion—will gain easy passage through Congress, especially in a divided governmental landscape.

As Watson aptly states, “Tax policy will be front-and-center and forced upon policymakers. This tax cliff is coming.” The ultimate direction of America’s tax policy in the coming years will depend heavily on the negotiations that follow the election, particularly as both Harris and Trump work to balance proposed tax cuts against the need for increased revenue and fiscal responsibility.

Conclusion

In conclusion, the next election is set to showcase contrasting visions for America’s tax policy through the prisms of Kamala Harris and Donald Trump. With the expiration of pivotal tax legislation on the horizon and public sentiment shaping around economic challenges, a robust conversation about taxes is not only imminent but essential. Both candidates must articulate their visions not only to convince voters but also to prepare for the consensus-driven approach required in an ever-complicated economic landscape. As Americans look to the future, the impact of tax reform will emerge as a fundamental narrative threading through the next era of governance.