What Could the Economy Look Like After the Election?

Audio version available here (2 min. 5 sec.)

Both presidential candidates Donald Trump and Kamala Harris have presented their proposals for economic changes during their potential terms. Here are their tax and business policies that could affect you.

Donald Trump:

Former President Trump has promised several major changes he’d make to boost the American economy. One that many in the service industry look forward to is an abolishment of taxes on tip wages. This could significantly lower taxable income for workers who make most of their money from customer tips. Another tax-saving measure is Trump’s pledge to lower corporate taxes further from the 21% the Tax Cuts and Jobs Act of 2017 established, down to potentially 15%. Additionally, other provisions from the TCJA, like lower individual tax rates, would be extended past the 2025 expiration date. He has also vowed to crack down on illegal immigration, which could affect the currently slowing job market.

Kamala Harris:

Vice President Harris has taken a different approach. Rather than lower tax rates for corporations, she has proposed raising the corporate tax rate to 28%. In turn, she also announced plans to raise the startup expenses deduction for small businesses from $5,000 to $50,000, without a firm deadline for businesses to claim it. For homeowners, she proposed a $25,000 down payment support in addition to a $10,000 tax credit for first-time home buyers. Even further, following the death of the American Families and Workers Act, she announced her intent to enact a $6,000 tax credit for parents of newborns.

Impacts:

Both Donald Trump and Kamala Harris’s proposed policies would mean major changes to the US economy, and the US deficit. Both candidates’ policies could cost the US government trillions of dollars. Harris’s $50,000 small business deduction would greatly lower tax revenue collected from small businesses, and the housing and child tax credits are not cheap either. Meanwhile, Trump’s bid for lower corporate taxes would also result in significantly less revenue collected from high income corporations. To pay for this, he calls for increased tariffs (10-20%) on imported goods, especially from China (60%). Harris claims her higher corporate tax rate, as well as a higher capital gains tax rate, would make up for her proposed tax relief.

As a business owner, it is imperative you be informed of these potential changes. It is also important to make business tax plans for whichever candidate wins. For assistance with this, reach out to XQ CPA’s tax professionals. Our CPAs and Certified Tax Coaches are here for you.

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Sources:

https://www.cnn.com/2024/09/10/economy/economy-plans-trump-harris/index.html