In the ever-evolving landscape of U.S. tax policy, former President Donald Trump's Tax Cuts and Jobs Act of 2017 and Vice President Kamala Harris's tax proposals present two markedly different visions for the country's fiscal future. The contrasting approaches offer insights into each leader's priorities and understanding of economic stimulation and wealth distribution.
Trump’s Tax Cuts and Jobs Act (2017)- Enacted in December 2017, Trump’s Tax Cuts and Jobs Act (TCJA) represented one of the most significant tax overhauls in recent U.S. history. Key highlights include:
1. Corporate Tax Rate Reduction -The corporate tax rate was slashed from 35% to 21%.
2. Individual Tax Rate-: Personal income tax rates were adjusted, with the top marginal tax rate dropping from 39.6% to 37%.
3. Standard Deduction-The standard deduction was nearly doubled, from $6,350 to $12,000 for single filers, and from $12,700 to $24,000 for married couples filing jointly.
4. Pass-Through Business Income: Owners of pass-through entities received a 20% deduction on qualified business income [^4^]. Critics argued the TCJA primarily benefited corporations and wealthy individuals while ballooning the federal deficit. Proponents, however, contended that it spurred economic growth and lowered unemployment rates.
Kamala Harris’s Tax Proposals-
Vice President Kamala Harris has outlined tax policies focusing more on middle-class relief and wealth redistribution. Her key proposals include:
1. LIFT the Middle-Class Act: Harris introduced the LIFT the Middle-Class Act, providing up to $6,000 a year in refundable tax credits to middle-income households.
2. Taxes on the Wealthy: Harris supports increasing taxes on the wealthiest Americans, including reversing Trump’s tax cuts for individuals making over $400,000 annually.
3. Higher Corporate Taxes: She advocates raising the corporate tax rate from 21% to 28% to ensure that corporations pay their fair share.
4. Tax Reform for Equity: Harris proposes closing loopholes that benefit the ultra-rich, such as the carried interest loophole, and implementing financial transaction taxes.
Comparative Analysis
Economic Growth vs. Wealth Distribution:
Trump’s plan emphasized economic growth through corporate tax cuts and incentives for business investment.
Harris’s approach is more focused on wealth distribution and providing direct financial relief to middle- and lower-income families.
Federal Deficit
Trump’s tax cuts significantly increased the federal deficit, with the Congressional Budget Office projecting trillions in additional debt over a decade.
Harris’s plan aims to be deficit-neutral by raising taxes on the wealthy and corporations. - Breadth and Depth.
While the TCJA benefited businesses and high-income earners directly, Harris’s proposals concentrate on middle-class earners, suggesting a more equitable distribution of tax benefits.
Ultimately, Trump's TCJA and Harris’s tax proposals reflect their broader economic philosophies and political ideologies. Trump's policy advocates argue for growth through reinvestment while Harris’s supporters emphasize equitable wealth distribution and direct aid to financially pressured households.
Grant Adam Coleman August 5, 2024
Sources:
Congressional Research Service
Tax Foundation
Internal Revenue Service (IRS)
Joint Committee Harris Senate Office Press Release
Tax Policy Center
Center on Budget and Policy Priorities
Policy Statement from Harris’s Political Campaign
Congressional Budget Office (CBO) Reports
The Lichtman keys, developed by Allan Lichtman, are a set of 13 true/false statements used to predict the outcome of U.S. presidential elections. Here's a quick rundown of the keys:
1. **Party Mandate**: After the midterm elections, the incumbent party holds more seats in the House than it did after the previous midterm elections.
2. **Contest**: There is no serious contest for the incumbent-party nomination.
3. **Incumbency**: The incumbent-party candidate is the sitting president.
4. **Third party**: There is no significant third-party or independent campaign.
5. **Short-term economy**: The economy is not in recession during the election campaign.
6. **Long-term economy**: Real per capita economic growth during the term equals or exceeds mean growth during the previous two terms.
7. **Policy change**: The incumbent administration effects major changes in national policy.
8. **Social unrest**: There is no sustained social unrest during the term.
9. **Scandal**: The incumbent administration is untainted by major scandal.
10. **Foreign/military failure**: The incumbent administration suffers no major failure in foreign or military affairs.
11. **Foreign/military success**: The incumbent administration achieves a major success in foreign or military affairs.
12. **Incumbent charisma**: The incumbent-party candidate is charismatic or a national hero.
13. **Challenger charisma**: The challenging-party candidate is not charismatic or a national hero.
To use the Lichtman keys to predict the outcome:
1. Compare each key against the current political and economic conditions.
2. If six or more keys are false, the incumbent party is predicted to lose. Otherwise, it is predicted to win.
Let's apply this to a hypothetical 2024 election with Kamala Harris as the incumbent-party candidate and Donald Trump as the challenger, assuming the current situation continues:
1. **Party Mandate**: True (Democrats need to hold the House).
2. **Contest**: True (Assuming no serious challenger to Kamala).
3. **Incumbency**: False (Harris is not the incumbent president).
4. **Third party**: True (Assuming no significant third party).
5. **Short-term economy**: True (Assuming no recession).
6. **Long-term economy**: False (Economic growth is under scrutiny).
7. **Policy change**: True (Assuming significant changes).
8. **Social unrest**: False (Sustained social unrest could be argued).
9. **Scandal**: False (Depends on ongoing investigations).
10. **Foreign/military failure**: True (No major failures).
11. **Foreign/military success**: True (Assuming some successes).
12. **Incumbent charisma**: False (Harris's charisma is debated).
13. **Challenger charisma**: True (Trump has charisma).
If 6 or more of these keys turn false, Harris would be in trouble. Based on a rough estimate, Harris has around 4 likely "false" keys, suggesting the race could be close.
Tax those who make over $400,000 per year on a bell curve to a maximum of 60% for those who make 2 million or more per year. It would equate to 40% to 60% on those top 5 percent earners.