We are now a little more than two months away from the next US Presidential election. Many of our clients are interested in following the contest, and the Presidential race currently looks like it will be close.
In their US Election 2024 section, The Economist magazine publishes a daily update on the Presidential polls. I like following this format because it’s assembled by a respected organization domiciled outside of the US.
Based on The Economist model, the latest projection, from August 30, shows Harris winning by 274 electoral votes to 264, with 270 electoral votes required to win.
Source: The Economist
From the perspective of the possible impact on personal finances, tax policy marks one of the bigger gaps between Democrats and Republicans.
Many provisions in the 2017 tax law, which reduced taxes, are scheduled to expire in 2026 if Congress takes no action.
Candidate Trump wants the 2017 law made permanent, while Candidate Harris has pledged no tax hikes on those making less than $400,000.
Below are other tax ideas that Harris supports (source is The Kiplinger Tax Letter):
Tax ideas for individuals, supported by Harris:
- Bring back the top 39.6% income tax rate for people making $400,000 or more (currently the top tax bracket is 37%)
- Hike the 3.8% net investment income surtax to 5% for $400,000 earners
- For taxpayers filing Jointly with incomes over $1,000,000, long-term capital gains tax would be imposed at ordinary tax rates up to 39.6% (44.6% with the 5% Net Investment Income tax added in); for separate filers, the income breakpoint is $500,000
- Tax unrealized gains upon death, with capital gains and losses reported on the decedent’s final income tax return, with a $5 million lifetime gain exclusion
- Apply a 25% minimum income tax on the ultrarich (those with $100 million in wealth); this tax would apply to unrealized capital gains
- Bring back expansions to the child credit: boost to $3,600 per child (from current $2,000), with monthly payments and full refundability
- A new one-time credit of $6,000 per child claimed in the first year of the child’s life
- Give first-time home buyers a credit of up to $10,000
- Allow more people to get credits for buying health insurance through the Health Insurance Marketplace
- Make tipped income tax free
Tax ideas for businesses, supported by Harris:
- Raise the 21% corporate tax rate to 28%
- Increase the 15% alternative minimum tax on large corporations to 21%
- Quadruple the 1% excise tax on stock buybacks by publicly held firms
It’s likely that additional tax ideas will be floated by both campaigns in the weeks ahead.
It’s also important to recognize that, regardless of who becomes 47th US President, the composition of the House and Senate will be critical in determining which policy proposals actually become law.
-RK