As the 2024 Presidential Election approaches, understanding the candidates’ election tax plans is crucial for voters to make informed decisions. These plans reflect each candidate’s economic vision and have the potential to significantly influence individuals, businesses, and the overall U.S. economy.
At LTax Consulting, we aim to simplify these complex issues, offering clear insights into how these tax proposals might impact your financial landscape in the coming years.
The Importance of Tax Policies in Elections
Tax policies are a fundamental aspect of political platforms, influencing everything from economic growth to income inequality. During election campaigns, candidates propose tax policies that promise reforms or tax cuts strategically designed to appeal to voters.
While candidates may intend to provide tax cuts, this isn’t always possible. Multiple factors influence tax policies, including the federal budget deficit, prevailing economic conditions and social objectives. In the current election cycle, candidates are crafting tax strategies to stimulate economic growth while managing fiscal responsibilities.
Overview of Current Tax Legislation
Understanding the current tax landscape is imperative for evaluating any proposed changes to the future of tax policy. The crux of the matter lies in how these changes can impact individual, trust and business tax rates and the economy.
The 2024 election brings several key tax issues to the forefront, each with significant ramifications for taxpayers:
- Extending 2017 TCJA Provisions: Candidates are considering whether to maintain the Tax Cuts and Jobs Act’s tax cuts and reforms. Extending TCJA tax provisions could add up to $4.6 trillion to the federal debt.
- Changes to Top Income Tax Rate, Estate Tax Exemptions and Capital Gains: Adjustments here could affect high earners, impacting wealth distribution, wealth transfer strategies and investment planning.
- Expanding Child Tax Credit: Increasing this credit aims to support families with children and reduce child poverty. Funding for the CTC will determine the overall financial impact on federal debt.
Taxation is complex, but understanding the basics can help individuals make informed financial and tax planning decisions.
Comparing the Tax Policies of 2024 Presidential Candidates
This election cycle has generated considerable buzz, with different positions taken by the candidates. Here, we highlight the tax policies of Vice President Kamala Harris and former President Donald Trump, each reflecting their party’s priorities and economic policies.
Kamala Harris
Vice President Harris presents tax policies focused on economic equity and supporting the middle class. Her approach includes potential updates to the earned income tax credit, child tax credit, standard deductions, and new tax incentives for housing.
Business Taxes
- Proposes increasing the corporate tax rate from 21% to 28%.
Credits, Deductions and Exemptions
- Proposes expanding the Child Tax Credit to $6,000 for children under 1 year old, $3,600 for children 2-5 years of age and $3,000 for older children.
Estate and Wealth Taxes
- Supports higher taxes on the ultra-wealthy to fund social programs.
- The Biden administration’s budget for 2025 proposes eliminating the step-up in the basis for capital gains greater than $5.25 million.
Individual Income Taxes
- Plans to exempt tip income from taxation.
- Proposes expanding housing tax credits to help support low-income households.
- Increase the top tax rate on long-term capital gains to 28 percent for taxable income above $1 million.
Payroll Taxes
- Supports President Biden’s proposal to subject earnings of more than $400,000 to Social Security taxes to strengthen the Social Security trust fund.
Tariffs and Trade
- Focuses on fair trade agreements to protect American jobs.
Donald Trump (R)
Former President Donald Trump’s tax policies focus on economic growth through tax cuts and reduced regulation. He aims to make the TCJA individual and estate tax cuts permanent, lower the corporate tax, exempt Social Security benefits from taxation and tax sizable private university endowments.
Business Taxes
- Supports lowering corporate tax rates to 15-20% from 21%.
- He initially lowered the corporate tax rate in 2017 from 35% to the current rate.
Credits, Deductions and Exemptions
- Proposes expanding deductions for businesses and individuals.
- His Vice Presidential running mate, J.D. Vance, recently suggested that the Trump administration plans to increase the Child Tax Credit to $5,000.
Estate and Wealth Taxes
- Aims to make the estate tax cuts of the 2017 TCJA permanent.
- The 2024 exemption amount is $13.61 million with a top estate tax rate of 40%.
Individual Income Taxes
- Plans to extend TCJA tax cuts from his previous term, which means federal tax brackets stay the same, with a 37% top marginal tax rate.
Payroll Taxes
- Suggests temporary payroll cuts to boost disposable income and exempt Social Security benefits from taxation.
Tariffs and Trade
- Proposes imposing a universal baseline tariff on U.S. imports of 10-20% and a 60% tariff on all U.S. imports from China.
- Considering replacing personal income taxes with increased tariffs.
Stay informed on tax policies that may impact your finances. For an up-to-date analysis of the candidates’ evolving tax plans, visit the Tax Foundation 2024 Tracker.
Focus on Your Financial Plan
A lot can happen between now and the next president’s arrival in the White House. Understanding each candidate’s tax policies is essential as voters head to the polls. These election tax plans not only shape the economic landscape but also have direct effects on personal finances and business decisions.
Staying informed is crucial, and LTax Consulting is committed to helping you navigate these complexities with confidence. Contact us today or call us at (561) 453-1441 for a personalized financial consultation and ensure you’re well-prepared for whatever the future holds.
LEGAL OR TAX: The information herein is not legal, such as trust or estate planning, advice, or tax advice. Any such information is provided for illustrative purposes only and must not be relied upon without the benefit of the advice of your lawyer and/or tax professional. Lido specifically disclaims any liability from any reliance on such information. Lido is not a legal service provider or tax professional and does not offer legal or tax advice. Should you desire to obtain tax or legal services or advice, you must enter into your own, independent engagement agreement with a licensed attorney or tax professional.