Both former President Trump and Vice President Harris announced economic and tax policy agendas earlier this month. Key implementing details are missing from both candidates’ plans, but the general outlines suggest a legislative battle over tax rules regardless of who wins the presidency. Both candidates’ plans have triggered predictions of big (as in trillions of dollars) revenue losses, although both candidates have also suggested ways that those losses would be contained if not offset. So, both pose risks for NAIFA tax issues.

Taxes: Specific proposals from former President Trump and from Vice President Harris are below.

Former President Trump is calling for:

• A cut in the corporate income tax rate from the current 20 percent to 15 percent for corporations whose products are made in America. It is unclear how the proposal would impact corporations that do not manufacture products (e.g., financial services).
• Full extension of current law’s expiring tax rules, including the Section 199A deduction for qualifying noncorporate business income, individual and capital gains tax rates, estate tax rules, etc.
• Tariffs on goods imported from countries that are out of balance on trade with the U.S.
• Tax-free Social Security benefits
• Tax-free tip income
• Expanded child tax credit (per his running mate, Sen. JD Vance (R-OH))

The former president says that between revenue from tariffs and “tremendous economic growth,” revenue provisions to offset the costs of these proposals will not be needed. (Many economists and Washington insiders—from both parties—disagree. But there will not be an official answer to that question until/unless Congress’ official scorekeeper, the Joint Committee on Taxation (JCT), does revenue estimates on these proposals.)

Vice President Harris is calling for:

• An increase in the capital gains tax rate on taxpayers with incomes of $1 million or more to a combined 33 percent (28 percent on capital gains and a five percent surcharge on “the wealthy”)—this is a smaller increase than the one included in the most recent Biden budget proposal which called for a hike in the capital gains tax to the top individual tax rate (37 percent under current law, 39.6 percent under the Biden budget proposal)
• An increase in the corporate tax rate from 21 percent to 28 percent
• Extension (probably as modified) of current law’s expiring individual provisions to the extent that expiration of current rules would result in a tax increase for people earning more than $400,000/year. This likely includes a modified extension of Section 199A (the deduction for qualifying noncorporate business income).
• Limited tax-free tip income (details are still to be announced, but early indications suggest that tax-free tip income would be limited to hospitality workers earning $75,000 or less in a year)
• Affordable housing tax breaks (and a provision providing $25,000 in down payment assistance (probably limited by income and to first-time home buyers)
• Expanded child tax credit

Vice President Harris largely supports the Biden Administration tax proposals contained in the most recent budget proposal—and that includes a variety of “tax-the-rich” proposals (including one that would tax very wealthy taxpayers’ investment gains in the year they occur, whether or not those asset gains were realized (i.e., the asset sold), adverse trust and estate tax rules, minimum taxes on both individuals and businesses, etc. Taken together, these offsetting revenue proposals could raise as much as $3-5 trillion over ten years, thus offsetting much if not all of the cost of her new tax benefit proposals.

Minimum Wage/Paid Leave—Vice President Harris calls for a federal paid leave program (without specifying how it would be financed, or the scope of such a program’s benefits), and an increase in the federal minimum wage (again, without specifying the new higher level or whether it would be phased in or immediate).

Former President Trump opposed a federal minimum wage increase in 2020 but has not spoken on the issue in this campaign. Likewise, he has not spoken on a federal paid leave program during this campaign, but during his presidency in 2017-2021, he supported a federal paid leave program (it was his daughter (and senior advisor) Ivanka’s “passion project”) and signed into law a measure that provides paid family leave to federal workers.

The Deficit/Debt—Spending: Former President Trump supports cutting federal spending. Vice President Harris supports “investments” by the federal government in a wide range of issue areas. Neither candidate has made addressing the federal debt and deficits a priority issue. But the looming expiration (on January 2, 2025) of the suspension of the statutory debt limit will make the issue of federal spending even more fraught than it already is.

Prospects: Of course, voters (including NAIFA members and their clients) will choose between presidential candidates based on far more issues than those listed above. Abortion, climate change, the economy in general, international affairs, education, candidate character, and other issues poll as key to voter decision-making. And voters will also have to decide whether the presidential candidates can act on their promises and proposals—meaning voters will have to determine for themselves whether the election will result in a cooperative or a contentious Congress, since most proposals will require Congress to enact legislation to put them in effect.

NAIFA Staff Contacts: Diane Boyle – Senior Vice President – Government Relations, at dboyle@naifa.org; or Jayne Fitzgerald – Director – Government Relations, at jfitzgerald@naifa.org.