2024 Election Tax Plans: A Breakdown of Key Tax Proposals

As the 2024 presidential election nears, both candidates—Former President Donald Trump and Vice-President Kamala Harris—have outlined tax plans designed to appeal to different groups, such as small business owners, hospitality workers, and families. Their approaches, while distinct, reflect their broader economic goals. However, it’s essential to note that any tax policy changes would require Congressional approval. Below is a breakdown of the key tax proposals from each candidate.

Donald Trump’s Tax Plan

Trump’s tax proposals aim to reduce taxes for businesses and workers, encourage domestic manufacturing, and provide relief to retirees. His main proposals include:

• Lowering the corporate tax rate from 21% to 20%, with an even lower 15% rate for companies that manufacture products in the U.S.
• Exempting tips and overtime pay from income taxes, providing financial relief to hospitality and service industry workers.
• Eliminating taxes on Social Security benefits for retirees, boosting their income by removing tax burdens on retirement funds.

Proposed Tariffs on Imported Goods

A significant part of Trump’s plan is the use of tariffs on imported goods, which he proposes to increase to 10%-20% on most imports and as high as 60% on imports from China. The goal is to make foreign goods more expensive and encourage the purchase of domestically made products, thus boosting U.S. manufacturing.

Kamala Harris’ Tax Plan

Harris’ tax plan focuses on raising taxes for high-income earners and corporations, while providing relief for families and small business owners. Her key proposals include:

• Raising the corporate tax rate from 21% to 28%, generating more revenue to fund social programs and infrastructure.
• Increasing the capital gains tax from 20% to 28% for individuals earning over $1 million annually.
• Exempting tips from income taxes, like Trump’s proposal, providing relief for hospitality and service industry workers.
• Expanding the child tax credit to $3,600 for children aged 2-5, $3,000 for children aged 6-17, and $6,000 for a child’s first year, aiming to reduce the financial burden on families.
• Providing $25,000 in down payment assistance for first-time homebuyers to help more people enter the housing market.
• Increasing the small business tax deduction for start-up costs from $5,000 to $50,000, supporting entrepreneurs and small businesses.

Harris’ tax plan focuses less on trade policies like tariffs and more on taxing corporations and high-income individuals to provide targeted relief for low- and middle-income families.

Comparing the Candidates’ Tax Proposals

Both candidates address certain common issues, but their methods differ significantly.

• Corporate Tax Rates: Trump’s plan focuses on lowering the corporate tax rate, especially for businesses that manufacture in the U.S., to incentivize domestic production and job creation. Harris, on the other hand, proposes raising the corporate tax rate to 28%, using the additional revenue to fund programs for families, small businesses, and social initiatives.
• Support for Service Workers: Both Trump and Harris propose exempting tips from income taxes, offering financial relief to hospitality and service workers, recognizing the importance of this sector to the economy.
• Small Business Relief: Trump’s plan includes corporate tax cuts and the use of tariffs to support American manufacturing, which could indirectly benefit small businesses in the domestic production sector. Harris offers more direct support through a significant increase in the small business start-up deduction, making it easier for entrepreneurs to get off the ground.
• Tariffs: Trump places heavy emphasis on tariffs as a way to boost U.S. manufacturing, proposing increases on imports to encourage domestic purchases. However, higher tariffs could raise costs for industries dependent on imports and lead to higher consumer prices. Harris’ tax plan does not focus on tariffs and instead emphasizes increasing tax revenue from corporations and high-income individuals to support programs for families and small businesses.

Key Considerations for Businesses and Individuals

For businesses, the potential for higher tariffs under Trump’s plan could be a significant factor, especially for companies relying on imports. While these tariffs might benefit U.S. manufacturers by reducing foreign competition, they could lead to increased costs for businesses that depend on international supply chains. Additionally, consumers could see price increases on goods that are imported or use imported materials.

On the other hand, Harris’ tax plan focuses more on increasing taxes for wealthier individuals and corporations, with the aim of redistributing those funds to support families, small business owners, and low- to middle-income households. Her plan offers substantial benefits for parents, first-time homebuyers, and entrepreneurs, but may increase the tax burden for higher earners and large corporations.

At LMC, we specialize in helping clients navigate complex tax landscapes. Whether you’re a business owner concerned about the potential effects of tariffs or an individual planning for potential tax changes, our expert team can provide tailored guidance and support. For more information or questions, please reach out to your LMC professional.