Vice President Kamala Harris and former President Donald Trump were both proposing tax changes that would rank among the largest in U.S. history, but their plans would impact very different groups of Americans by providing tax credits and cuts to some taxpayers, while raising taxes on others.
While taxes are always on the ballot during a presidential election, the 2024 race has even more at stake given that many provisions in Trump’s signature tax legislation, the 2017 Tax Cuts & Jobs Act,p will expire at the end of 2025. If Trump wins, he’s expected to extend many of those provisions, while Harris has vowed to only keep those that help people earning under $400,00
At the same time, both candidates have sought to curry favor with some groups of voters by promising specific tax cuts and credits, such as Harris’ plan to introduce a $6,000 Child Tax Credit for parents of newborns. Trump, meanwhile, has dangled a host of tax cuts to everyone from senior citizens (promising to get rid of income taxes on Social Security) to tipped workers (vowing to eliminate taxes on tips).
But Trump is also proposing across-the-board tariffs on all imports, a plan that would effectively act as a sales tax on American consumers. That’s because the countries that manufacture products imported to the U.S. do not pay tariffs; rather, tariffs are added to the prices of imported products that American consumers purchase.
Would Trump cut or raise your taxes?
Trump’s combination of tariffs and tax cuts — including cutting the corporate tax rate to 15% from its current 21% — would rank as the sixth-biggest tax cut since 1940, according to a recent Tax Foundation analysis.
However, Trump’s tax cuts would require Congressional approval, which could prove to be a hurdle if at least one of the chambers is controlled by Democrats.
If Trump is unable to enact his tax cuts but adds his proposed tariffs — which don’t need a Congressional greenlight — he would instead be introducing the seventh-biggest tax increase since 1940, the Tax Foundation says. That’s because tariffs are essentially sales taxes paid by U.S. consumers, with the typical household paying about $1,700 more each year in additional costs, according to one estimate.
Meanwhile, income taxes would decline under Trump for all income groups, but the biggest beneficiaries would be high-income households, according to the Penn Wharton Budget Model. Their analysis includes Trump’s proposed tax cuts but doesn’t include the impact of tariffs.
