Election Economics: Key Takeaways from the 2024 Presidential Tax Plans

As the U.S. gears up for the November 5^th presidential election, candidates Kamala Harris and Donald Trump present contrasting visions for the nation’s tax future. With the economy and tax policy at the forefront, each contender is pushing distinct approaches with regards to how taxation will shape America’s path forward. Here’s a closer look at what to expect from each candidate’s respective tax proposals.

Business Tax

The Harris Administration proposes to raise the corporate income tax to 28% (with proposals reaching as high as 35%) a considerable increase from the current 21% [1]. If she opts to refrain from renewing the Tax Cuts and Jobs Act (TCJA), the corporate tax rate will revert to 35%.

Under the Trump Administration, we could see the corporate income tax reduced from the current rate of 21% to 20%, with a proposal to make those changes permanent. Additionally,  companies that manufacture in the U.S. would be taxed at 15% in an effort to encourage domestic production and stimulate economic growth.

Experts worry that varying corporate taxes could significantly impact the U.S. economy. It is predicted that investments, job growth, and wage increases may suffer with a corporate tax rate of 28% or 35%. 

International Tax

In 2025, global intangible low-tax income (GILTI), foreign-derived intangible income (FDII), and base-erosion and anti-abuse (BEAT) tax rates are expiring, making international tax rates a dividing point for both parties. GILTI establishes a minimum tax on foreign earnings to prevent multinational corporations (MNCS) from evading taxation. FDII works with GILTI to tax income earned outside of the United States, targeting profits on exports. As an further consideration, BEAT imposes a minimum tax on foreign earnings to prevent corporations from profit shifting to jurisdictions with lower tax rates than the United States. BEAT only applies to multinational corporations that average gross receipts of at least $500 million over the prior three tax years. [2]

Under the Tax Cuts and Jobs Act (TCJA), the GILTI tax rate currently ranges from 10.5% to 13.125%, with the FDII tax rate set at 13.125% and the BEAT tax rate at 10%. However, Trump and the Republican party plan to increase these rates to 12.5% for GILTI, 15% for FDII, and 12.5% for BEAT, with the aim to further discourage corporations from shifting operations abroad. [3]

The Harris campaign will increase the GILTI tax rate to 21%, repeal FDII, and replace BEAT with the OECD pillar two rule which is a global minimum tax proposed at 15%. Without any change, the rate will rise to a minimum of 13.125%. [4]

Tariffs

If Harris continues with the current administration’s tariff policies, we can anticipate higher tariffs on goods such as steel, green energy, and medical goods. Notably, tarriffs on steel and aluminum are expected to rise to 25%, while medical syringes may see an increase from 0% tariff to 50%. Electric vehicles are also projected to face a 75% tariff hike. 

Trump has proposed a 10% baseline tariff on all imported goods which could generate an additional $250 billion in revenue in its first year [5]. While this could lower the U.S. overall debt, it may also impact consumers. Such a move could trigger a trade war where retaliatory tariffs go into effect from foreign countries. Additionally, Trump seeks to implement a 60% tariff on all imports from China.

As the global landscape evolves, which tax strategy do you believe will better prepare the U.S. to further compete on the world stage?

Individual Income Tax

Harris aims to increase the individual income tax rate to 39.6% for individuals earning over $400,000 ($450,000 for joint filers) and increase the Medicare tax rate to 5% for income earners above $400,000. Capital gains and qualified dividends (e.g. stocks), would see a drop to 28%, down from 39.6% under the Biden administration. The Harris administration’s plan includes exempting tip income from taxes. Child tax credits may also be adjusted with a $6,000 credit for newborns, a $3,600 credit for children aged 2-5, and $3,000 for older children. [6]

Trump’s primary tax goal is to make the expiring 2017 Tax Cuts and Jobs Act permanent, which would likely prevent a 2% to 4% increase in taxes across all tax brackets. The TCJA increased standard deductions for single and joint filers. Trump has also proposed ending double taxation for U.S. expats. On the campaign trail, Trump has proposed replacing income taxes with hefty tariffs on foreign countries. [7] The Trump administration is also pushing for tax exemptions on Social Security benefits, overtime pay, and tip income.

Takeaways

Donald Trump’s presidential agended emphasizes an “America First” approach, which is reflected in his policies on taxation. His administration’s strategy includes Increases to taxes on multinational corporations, lowering the corporate tax rate, and implementing a baseline tariff on all imports. These measures will be enacted in an attempt to bring businesses to the United States and discourage them and the jobs they accompany, from moving overseas. Companies looking to move their business to America can expect substantial benefits under the Trump administration.

Kamala Harris’s plan as president, titled, “A New Way Forward,” reflects her commitment to increasing corporate, individual, and international taxes. These proposed changes aim to generate revenue to address the substantial national debt and ensure that wealthy individuals contribute their fair share to the economy.

How will the differing tax strategies proposed by Donald Trump and Kamala Harris impact business decision-making for multinational corporations considering operations in the United States?

Sources:

[1] https://www.cnbc.com/2024/06/13/trump-all-tariff-policy-to-replace-income-tax.html

[2] https://pro.bloombergtax.com/insights/international-tax/base-erosion-and-anti-abuse-tax-beat/#:~:text=To%20be%20subject%20to%20the,(2%25%20for%20some%20industries)

[3] https://bipartisanpolicy.org/explainer/the-2025-tax-debate-gilti-fdii-and-beat-under-the-tax-cuts-and-jobs-act/#:~:text=The%20tax%20rate%20on%20GILTI%20is%20scheduled%20to%20rise%20in,(21%25%20*%200.375))

[4] https://www.crowell.com/en/insights/client-alerts/harris-and-trump-on-tax-top-5-tax-issues-for-companies-to-watch

[5] https://taxfoundation.org/blog/biden-tariffs-china/

[6] https://taxfoundation.org/research/all/federal/biden-budget-2025-tax-proposals/ 

[7] https://www.investopedia.com/taxes/trumps-tax-reform-plan-explained/