The Presidential Campaign Trail and Taxes: What Voters Need to Know
As we approach the pivotal presidential election, taxes have emerged as one of the hottest issues on the campaign trail. Both candidates—Kamala Harris and Donald Trump—are striving to distinguish their economic plans, particularly regarding taxation. Understanding the nuances of their proposals is essential for voters, especially as the outcome will likely have a significant impact on their financial future.
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The Landscape of Expiring Tax Breaks
One critical factor looming over this election is the Tax Cuts and Jobs Act (TCJA) of 2017, which enacted trillions of dollars worth of tax breaks that could soon expire. According to the Tax Foundation, "If Congress does nothing, most Americans will face higher taxes, worse incentives for work and investment, and a more complicated tax system starting in 2026."
As both candidates navigate their respective platforms, it’s essential for voters to understand the consequences of these potential changes—especially when it comes to their personal finances.
Cutting Taxes: A Common Ground
It’s no surprise that tax cuts form a cornerstone of both candidates’ proposals. Voters generally favor initiatives that could lighten their tax burdens, creating fertile ground for candidates to discuss potential reductions.
Trump has indicated his intention to maintain several tax cuts established under the TCJA, arguing that these measures have already benefitted millions and could aid those grappling with inflation and rising costs of living. His campaign maintains that these tax reforms will spur economic growth without exacerbating governmental financial strain.
In contrast, Harris’s plans may not explicitly advocate for TCJA extensions, but her campaign has hinted at a more expansive view on tax breaks that could also harness support from Democrats aligned with President Biden’s prior policies.
Increasing Taxes: Diverging Approaches
While both candidates share an understanding of the necessity to address the federal budget deficit, their strategies for raising revenue sharply diverge. Harris aims to hike the corporate tax rate to 28% from the current 21%, in connection with the TCJA. Additionally, she proposes increasing the top marginal income rate from 37% to 39.6% and taxing investment gains exceeding $1 million at the ordinary income rate.
On the other hand, Trump has signaled a preference for tariffs on imported goods as a revenue mechanism. He has even floated the idea of eliminating the federal income tax altogether—a bold proposition that would redefine the taxpayer landscape dramatically.
Eliminating Taxes on Specific Income Sources
In a rare convergence of ideas, both candidates have shown support for eliminating income taxes on tip income. Initially proposed by Trump, this notion has garnered attention from both camps, underscoring a common goal to alleviate financial pressure on workers in the service industry.
Furthermore, Trump has advocated for the elimination of income taxes on Social Security. The fate of this crucial program remains a critical topic, as concerns over its funding and sustainability continue to grow in public discourse.
Expanding the Child Tax Credit: A Family-Friendly Approach
Both candidates recognize the financial strain on working American families and have outlined respective plans to expand the Child Tax Credit (CTC). Harris has proposed an ambitious expansion that could yield up to $6,000 in tax relief for families welcoming newborns. Additionally, she supports increasing the earned income tax credit for filers without children.
Trump’s proposal includes expanding the CTC to a $5,000 universal credit, aiming to deliver more financial support to families.
Conclusion: Understanding the Implications
As the presidential campaign intensifies, it becomes increasingly important for voters to analyze how each candidate’s tax policies will affect their financial futures. The proposals put forth by Harris and Trump extend far beyond mere number changes; they represent fundamental shifts in fiscal policy that could influence everything from job growth to individual financial stability.
At GOBankingRates, we aim to provide clear and balanced coverage of these impactful issues, equipping you with the information needed to navigate the complexities of the financial landscape. For ongoing insights into the economy and politics, explore our range of articles and resources at GOBankingRates.com.