With the 2024 election approaching, the tax policies proposed by Kamala Harris and Donald Trump highlight two very different visions for the U.S. economy. Here’s a breakdown of each candidate's tax proposals, focusing on the changes they aim to bring to capital gains, corporate taxes, individual income rates, and more.

Capital Gains Tax

Kamala Harris: Harris has a focused approach to taxing capital gains for the wealthiest households. She proposes an unrealized capital gains tax on households worth over $100 million and plans to increase the long-term capital gains rate from 20% to 28% for high earners, specifically those with annual incomes over $1 million. Additionally, Harris aims to raise the net investment income tax (NIIT) from 3.8% to 5% on incomes above $400,000, targeting income from investments rather than wages to create a more balanced tax structure​.

Donald Trump: Trump does not propose any changes to the capital gains tax rate. His stance aligns with maintaining the current 20% rate on capital gains for high earners, preserving the tax advantages for investors. This plan aligns with his general strategy of upholding the Tax Cuts and Jobs Act (TCJA) of 2017, which introduced a friendlier tax environment for investment income​.

Corporate Tax Rates

Kamala Harris: Harris plans to raise the corporate tax rate from 21% to 28%, aiming to offset the large corporate tax cuts provided under the TCJA. This increase applies across all corporations and is intended to ensure large companies contribute more federal revenue, which Harris proposes would support new tax credits and social programs​.

Donald Trump: Trump proposes reducing the corporate tax rate even further, lowering it from 21% to 20% and providing a preferential 15% rate for companies producing goods domestically. This targeted tax relief is designed to boost domestic manufacturing, potentially benefiting large U.S.-based companies that can meet the “Made in America” criteria​.

Individual Income Tax Rates

Kamala Harris: Harris aims to increase the top marginal tax rate from 37% to 39.6% for individuals earning more than $400,000, restoring it to pre-TCJA levels. The proposal includes a 5% NIIT on incomes over $400,000, ensuring high earners contribute more to the federal budget while maintaining the current tax rates for those making less than $400,000.

Donald Trump: Trump’s primary focus is making the TCJA tax cuts permanent, preserving the reduced tax rates across all brackets that were set to expire in 2025. This approach would maintain the 37% top marginal tax rate and extend other provisions that reduce tax liability for individual earners​.

Taxes on Tips and Overtime Pay

Both Candidates: Harris and Trump agree on one point—they both propose eliminating taxes on tips. This policy is designed to alleviate the tax burden on tipped employees, making their take-home pay higher. Trump also proposes eliminating taxes on overtime pay, which would be a significant benefit for hourly and non-salaried workers, increasing their net income​.

Social Security Taxes

Donald Trump: Trump plans to eliminate taxes on Social Security benefits, a policy aimed at benefiting retirees by reducing their tax burden. Harris has not proposed any changes to Social Security taxes, making Trump’s stance unique on this issue​.

Tariffs

Kamala Harris: Harris opposes implementing new tariffs, citing concerns that tariffs can increase costs for American consumers and create trade tensions. This approach aligns with a more open trade stance.

Donald Trump: Trump has a strong stance on tariffs, proposing a baseline tariff of 10-20% on all imports and up to 60% on goods imported from China. This plan is designed to encourage domestic manufacturing by making imported goods more expensive, although it could lead to increased costs for U.S. consumers​.

Startup Expenses Deduction

Kamala Harris: Harris proposes increasing the deduction for startup expenses from $5,000 to $50,000. This significant increase aims to support entrepreneurs by allowing them to deduct more of their early-stage business expenses, reducing the initial financial burden​.

Final Thoughts

The 2024 election presents voters with distinct choices for the future of U.S. tax policy. Harris’s proposals focus on increasing taxes for corporations and high-income earners to fund social initiatives and provide economic relief to middle- and lower-income families. Trump’s plan, however, centers on extending the TCJA’s tax cuts and introducing additional benefits for domestic producers, retirees, and hourly workers, aiming to stimulate economic growth through a lower tax burden. If you’re still on the fence about who to vote for, and tax policy is a top concern, consider which plan aligns best with your financial priorities and long-term vision. Please remember, this analysis is intended to inform and educate, and should not be seen as an endorsement of any candidate for public office