Trump vs. Harris Economic Plan
Election season is finally here, with most states already open for early voting, and Nov. 5 just two weeks away.
As voters head to the polls, the economy is one of the most important, if not the most important, issue.
U.S. Vice President Kamala Harris and former President Donald Trump have bombarded battleground states with ads touting their plans, while bashing the opposition.
Here is an analysis of the two candidates’ economic agendas with some insights from a Certified Financial Planner™ on what it can mean to your money:
Before delving into the specifics of what the next four years may hold, let’s look at where the past four years have brought us. Keep in mind that when President Joe Biden took office in January 2021, the world was still climbing out of the COVID-19 pandemic, therefore statistics will be provided for pre-COVID (February 2020, unless otherwise noted) as another point of reference.
Here are the key benchmarks:
The most volatile of these economic indicators were the rate of inflation, and subsequently the stock market.
While the CPI measurements recorded immediately before the pandemic, when Biden took office, and today are all near the Fed’s long-term target rate of 2%, the real story was what happened in between.
CPI peaked in June 2022 at 9.1%, the highest rate in over 40 years.
The Federal Reserve’s aggressive interest rate hikes helped to bring inflation back down to where it is today.
Similarly, the stock market was progressively higher at each of these recorded dates, but experienced volatility in between.
Severe dips occurred during the COVID-19 pandemic (34% drop from February 2020 peak to March 23, 2020 low) and fell 19.4% in calendar year 2022 as the Fed started hiking rates. The unemployment rate remained stubbornly low since the pandemic recovery and GDP is near normal.
The increase in national debt has been arguably the steadiest trend, moving consistently in one direction, up.
So, what are candidates Trump and Harris proposing to keep inflation and unemployment low, while boosting GDP, curtailing budget deficits, and maintaining a strong stock market? Here are some highlights of each of their plans directly from their campaign websites:
Kamala Harris and Tim Walz’s Opportunity Economy
- Promise that no one earning less than $400,000 a year will pay more in taxes.
- Increase the Child Tax Credit (CTC) from $2,000 to $3,600.
- Expand Earned Income Tax Credit (EITC) to $1,500 for low-income people not raising a child in their home.
- Expand coverage under Medicaid and the Affordable Care Act (ACA also known as “Obamacare).
- Extend the $35 cap on insulin and the $2,000 cap on out-of-pocket expenses from seniors to all Americans.
- Expand Low-Income Housing Tax Credit (LIHTC) to incentivize developers to build more affordable rental housing supply.
- Create Neighborhood Homes Tax Credit to support building owner-occupied homes in low-income areas and for first-time homebuyers.
- Offer up to $25,000 in down-payment assistance to first-time homebuyers.
- Expand the business startup expense deduction from $5,000 to $50,000.
- Promise no cuts to Social Security or Medicare.
- Increase corporate tax rate from 21% to 28%.
- Increase capital gains tax rate for those earning over $1 million a year from 20% to 28%.
Donald Trump and J.D. Vance’s America First Economy
- Make permanent the provisions of the 2017 Trump Tax Cuts and Jobs Act (scheduled to sunset in 2025).
- Eliminate taxes on tips for restaurant and hospitality workers.
- Repeal the Green New Deal and continue being the top producer of oil and natural gas in the world.
- Oppose creation of a Central Bank Digital Currency and defend the right to mine Bitcoin.
- Open limited portions of federal lands to allow for new home construction.
- Create alternatives to traditional four-year college degree.
- Create baseline tariffs on foreign-made goods and pass the Trump Reciprocal Trade Act.
- Revoke China’s Most Favored Nation status and stop China from buying American real estate and industries.
- Stop the importation of Chinese vehicles.
- No cuts to Social Security or Medicare.
- Reduce corporate tax rate for domestic production, repeal green energy tax credits.
- Close Department of Education and return educational systems to state control.
- Impose universal tariff on all U.S. imports of 20%.*
- Raise Section 301 tariffs on China to 60%.*
- Exempt overtime pay from income tax.*
- Create itemized deduction for auto loan interest.*
- Eliminate SALT (state and local taxes) deduction cap of $10,000.*
- 10% tariffs on U.S. exports to China*
*Comments from the Trump campaign not listed on his website but noted by the Tax Foundation.
A quick observation from the above summary, and made apparent throughout the debates and campaign season, is that Harris’ plan contains more specifics and numbers, whereas Trump has been more conceptual.
Trump has argued that no proposed agenda goes exactly as planned, that in our system of checks and balances, going through the U.S. Senate and U.S. House of Representatives always produces some sort of compromise.
For example, President Biden campaigned largely on a tax overhaul to go after the rich, big tech, and help the middle class, but the U.S. spent most of 2020-2024 in Trump’s TCJA tax environment.
Similarly, Biden sought to be the greenest president to date, but since 2018 the U.S. has been the biggest oil producer in the world every year.
Trump’s agenda is built largely on lowering taxes for U.S. citizens and corporations, securing the southern border, and going on the economic offensive against China.
Most of this is a direct carryover from his first term.
While the latter two points are about national security, they have a direct economic impact.
For instance, his campaign website promises to stop Democrats' plans to add tens of millions of new illegal immigrants to Medicare.
Trump promises to restore his original border policies, halt release of illegal aliens into the interior, resume border wall building, and create a Fentanyl Blockade with U.S. Navy, and invoke the Alien Enemies Act to remove known gang members, drug dealers, and cartel who are here illegally.
He also says he will cut federal funding to sanctuary jurisdictions that release illegal alien criminals and require their local cooperation with Federal Immigration Enforcement.
Trump also points to global tariffs as support for his domestic tax cuts.
"If India, China, or any other country hits us with a 100 or 200 percent tariff on American-made goods, we will hit them with the same exact tariff. In other words, 100 percent is 100 percent. If they charge US, we charge THEM — an eye for an eye, a tariff for a tariff, same exact amount."
This is the crux of his Trump Reciprocal Trade Act. The current China tariff average is 341% higher than the United States, and the European Union tariff average is 50% higher than the U.S. The world average tariff rate is more than twice that of the U.S.
Harris’ economic plan is very much grounded in helping young families.
This is apparent from her proposed increases to benefits like the Child Tax Credit and incentives for home builders.
Her campaign website calls her plans the biggest supply side boost in housing history. Economists could argue that offering an incentive to builders and buyers simultaneously, supply and demand, would cancel each other out in with home price increases moving in step.
Both candidates offer pros and cons from an investor standpoint.
Large multinational corporations may fear Trump’s aggressive tariffs as our economy relies so heavily on imports, especially for manufacturing and technology.
It's assumed that foreign companies would simply pass on their new tax burden to the end customer via higher prices.
However, Trump’s promise to extend TCJA past 2025 and not raise the corporate tax would be welcomed by the stock market.
Conversely, Harris has not spoke much about tariffs or trade warfare, but her plans for increasing the corporate tax, income tax, capital gains tax, and possibly taxing unrealized capital gains would all be seen as a negative.
Please consider viewing both candidates’ campaign websites for further information before casting your vote.
Remember, while the office of presidency may be the most powerful position in the world, the U.S. government has always run on a three-branch system of checks and balances, so for better or worse, many campaign promises do not become reality, or if they do, are some comprised version thereof.
Bryan M. Kuderna is a Certified Financial Planner™ and the founder of Kuderna Financial Team, a New Jersey-based financial services firm. He is the host of The Kuderna Podcast and author of ,"WHAT SHOULD I DO WITH MY MONEY?: Economic Insights to Build Wealth Amid Chaos."
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