I figured this subject was a common enough theme for its own thread. But, I've been wrong before given that I'm not the anointed thread starter. Bolding and underlining is mine. Most of this tax policy is a bit of a guessing game IMO. The one thing I am strongly against is making tips tax free. All that will do is shift even more employers and business entities into guilting the consumer for not tipping so that they can convert more wage to consumer-paid. Then, the government will have a whole class of people who work but effectively do not pay into the system like the rest of us. I believe it should be the opposite. In places that have lowered minimum wage due to tips the regular minimum wage laws should apply. We should be shifting tips back toward a kind gesture for good service, not a cultural requirement of using some service industries.
Today, we are starting a series called The Stakes covering the major issues of the campaign.
Regardless of who wins the election, the next president will quickly have to deal with major changes to the tax code. That’s because a set of tax cuts enacted by Donald Trump in 2017 will expire next year, and Congress will decide which tax cuts to keep, end or expand.
Of all the campaign policy issues, this one is the most likely to hurt, or help, your finances. Trump has proposed tax changes that would largely benefit the wealthy and corporations. He has also called for new tariffs — taxes on foreign goods — that would raise prices for everyone. Kamala Harris, like President Biden before her, has promised to reduce taxes for lower and middle earners and increase taxes on the rich. She has not proposed new tariffs, although she has not ruled them out.
Below, I’ll explain how these plans could affect you. This newsletter is the first in a series we’ll run between now and Election Day. In it, Times journalists will focus on the policy stakes of the 2024 election — and how life would be different under a Harris administration or a Trump administration. We’ll examine other subjects, including abortion, democracy and immigration, in future newsletters.
The 2017 cuts largely benefited the wealthy and corporations. But they also included some reductions for low- and middle-income Americans. Most of the 2017 cuts will expire next year, and members of Congress are preparing for a fight.
Trump wants to extend everything — and go further. He has proposed eliminating taxes on tips and Social Security benefits and reducing the corporate tax rate to 15 percent, from 21 percent. He argues the cut would leave businesses with more money to grow, spend and hire, helping the economy.
Trump’s plan would add $5.8 trillion to the debt over 10 years, according to the Penn Wharton Budget Model. That would expand a national debt and a budget deficit that many economists already consider concerningly large.
Harris says she would leave the 2017 tax cuts in place for people earning up to $400,000 per year but raise rates for those who earn more. She argues that the rich can afford higher taxes to pay for policies that help everyone else, including an expanded child tax credit for parents. Like Trump, she favors eliminating taxes on tips.
Harris’s plan would add $1.2 trillion to the debt over 10 years, the Penn Wharton Budget Model found. She has promised to reduce the deficit but has not specified how she would make up for the budget shortfall in her current proposals.
The tariffs
Over the past decade, Democrats and Republicans have shifted from the bipartisan free trade paradigm of the 1990s and 2000s. They have increased tariffs on foreign industries that produce cheaper goods than their U.S. counterparts. For example, Biden has imposed a 100 percent tariff on Chinese electric cars.
Trump wants to go further. He has suggested a 10 to 20 percent tariff on all foreign goods, along with a 60 percent tariff on all imports from China.
Harris comes from the Biden administration, which has used tariffs on a more limited basis than Trump has proposed. She has criticized Trump’s tariffs as too broad — describing them as “a Trump tax on gas, a Trump tax on food, a Trump tax on clothing, a Trump tax on over-the-counter medication.”
Supporters of tariffs argue that they would not increase prices — that foreign businesses would eat the cost instead of passing it on to consumers. But historically that’s not true.
In fact, the purpose of a tariff is to increase prices. American products are generally more expensive than those made in China, Mexico and other low-income countries because labor costs are higher here. Tariffs try to level the playing field by increasing prices for foreign goods. In a recent interview with NBC News, JD Vance, Trump’s running mate, argued that the tariffs would reinvigorate U.S. production. “Anything that you lose on the tariff from the perspective of the consumer, you gain in higher wages, so you’re ultimately much better off,” Vance claimed.
New tariffs could also raise revenue, but not enough to make up for the deficits from either candidate’s tax cuts.
Those numbers, however, do not include the impact of tariffs. If they are included, Trump’s plan would actually reduce a middle-class household’s after-tax income by $1,700, the Peterson Institute for International Economics found. Wealthy households’ after-tax income would still increase. Since Harris hasn’t proposed new tariffs, her numbers are unchanged.
How much of this will happen? Federal law allows the president to unilaterally impose tariffs, making at least some new ones likely. The tax cut extensions are less certain. They require congressional approval, so the winners of this year’s 468 House and Senate elections will play a big role in dictating your future tax rates.
Related: Republicans often enact tax cuts that are temporary, but once people get used to paying less, it becomes hard for Democrats to reverse them. Senator Elizabeth Warren has called this the “tax doom loop.”
Harris and Trump on taxes
Today, we are starting a series called The Stakes covering the major issues of the campaign.
Regardless of who wins the election, the next president will quickly have to deal with major changes to the tax code. That’s because a set of tax cuts enacted by Donald Trump in 2017 will expire next year, and Congress will decide which tax cuts to keep, end or expand.
Of all the campaign policy issues, this one is the most likely to hurt, or help, your finances. Trump has proposed tax changes that would largely benefit the wealthy and corporations. He has also called for new tariffs — taxes on foreign goods — that would raise prices for everyone. Kamala Harris, like President Biden before her, has promised to reduce taxes for lower and middle earners and increase taxes on the rich. She has not proposed new tariffs, although she has not ruled them out.
Below, I’ll explain how these plans could affect you. This newsletter is the first in a series we’ll run between now and Election Day. In it, Times journalists will focus on the policy stakes of the 2024 election — and how life would be different under a Harris administration or a Trump administration. We’ll examine other subjects, including abortion, democracy and immigration, in future newsletters.
The tax cuts
Trump campaigned in 2016 on a promise to slash tax rates. He delivered tax cuts in his first year in office.The 2017 cuts largely benefited the wealthy and corporations. But they also included some reductions for low- and middle-income Americans. Most of the 2017 cuts will expire next year, and members of Congress are preparing for a fight.
Trump wants to extend everything — and go further. He has proposed eliminating taxes on tips and Social Security benefits and reducing the corporate tax rate to 15 percent, from 21 percent. He argues the cut would leave businesses with more money to grow, spend and hire, helping the economy.
Trump’s plan would add $5.8 trillion to the debt over 10 years, according to the Penn Wharton Budget Model. That would expand a national debt and a budget deficit that many economists already consider concerningly large.
Harris says she would leave the 2017 tax cuts in place for people earning up to $400,000 per year but raise rates for those who earn more. She argues that the rich can afford higher taxes to pay for policies that help everyone else, including an expanded child tax credit for parents. Like Trump, she favors eliminating taxes on tips.
Harris’s plan would add $1.2 trillion to the debt over 10 years, the Penn Wharton Budget Model found. She has promised to reduce the deficit but has not specified how she would make up for the budget shortfall in her current proposals.
The tariffs
Over the past decade, Democrats and Republicans have shifted from the bipartisan free trade paradigm of the 1990s and 2000s. They have increased tariffs on foreign industries that produce cheaper goods than their U.S. counterparts. For example, Biden has imposed a 100 percent tariff on Chinese electric cars.
Trump wants to go further. He has suggested a 10 to 20 percent tariff on all foreign goods, along with a 60 percent tariff on all imports from China.
Harris comes from the Biden administration, which has used tariffs on a more limited basis than Trump has proposed. She has criticized Trump’s tariffs as too broad — describing them as “a Trump tax on gas, a Trump tax on food, a Trump tax on clothing, a Trump tax on over-the-counter medication.”
Supporters of tariffs argue that they would not increase prices — that foreign businesses would eat the cost instead of passing it on to consumers. But historically that’s not true.
In fact, the purpose of a tariff is to increase prices. American products are generally more expensive than those made in China, Mexico and other low-income countries because labor costs are higher here. Tariffs try to level the playing field by increasing prices for foreign goods. In a recent interview with NBC News, JD Vance, Trump’s running mate, argued that the tariffs would reinvigorate U.S. production. “Anything that you lose on the tariff from the perspective of the consumer, you gain in higher wages, so you’re ultimately much better off,” Vance claimed.
New tariffs could also raise revenue, but not enough to make up for the deficits from either candidate’s tax cuts.
The plans’ impact
How would the tax plans affect actual people? A middle-class household with $80,000 in income would gain $1,700 after taxes under Trump’s plan and $2,200 under Harris’s, according to the Penn Wharton Budget Model. A household in the top 0.1 percent, with $14 million in income, would gain $377,000 under Trump and lose $167,000 under Harris.Those numbers, however, do not include the impact of tariffs. If they are included, Trump’s plan would actually reduce a middle-class household’s after-tax income by $1,700, the Peterson Institute for International Economics found. Wealthy households’ after-tax income would still increase. Since Harris hasn’t proposed new tariffs, her numbers are unchanged.
How much of this will happen? Federal law allows the president to unilaterally impose tariffs, making at least some new ones likely. The tax cut extensions are less certain. They require congressional approval, so the winners of this year’s 468 House and Senate elections will play a big role in dictating your future tax rates.
Related: Republicans often enact tax cuts that are temporary, but once people get used to paying less, it becomes hard for Democrats to reverse them. Senator Elizabeth Warren has called this the “tax doom loop.”
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