Which presidential candidate would lessen your tax burden?

OPINION:

The following analysis is part of The Washington Times’ Voter Guide, which outlines the candidates’ positions on the most important policy topics.

Many voters are wondering which of the presidential candidates would empty their pockets more. It’s a hotly debated topic as the campaign enters the homestretch, and former President Donald Trump and Vice President Kamala Harris have different takes on the question. 

In 2017, Mr. Trump signed a Republican tax overhaul that offered more than $3.4 trillion in reductions to individual and estate tax burdens. This benefit expires at the end of 2025, and Ms. Harris says she’s happy to see many of these cuts go away.

The former president vows to make one of the biggest middle-class tax cuts in history permanent. The Treasury Department calculated the annual savings for an average family of four at $2,000. The measure also doubled the child tax care credit to $2,000 per child.

IRS figures show that the percentage of total income taxes collected from the top 1% of earners rose from 40% to 46% in 2022. This was the largest share of taxes paid by the rich ever, as economist Stephen Moore has detailed in our pages.

In addition to offering tax relief to middle-class Americans, Mr. Trump dropped the corporate tax rate from 35% to 21% and allowed businesses to write off domestic investments for a limited time.

This boosted the size of the overall economy by about one-tenth of a percentage point a year, which translates to an annual wage increase of about $750 per worker, according to a study from researchers from Princeton University, the University of Chicago, Harvard University and the Treasury Department who studied the effects of the law.

On the campaign trail, Mr. Trump has vowed to drop the corporate tax rate even lower — to 15% — to spur investment in American industry. He says he will eliminate taxes on tips and overtime pay, a position Ms. Harris has also adopted. He will make car loans tax-deductible and double the tax levied on Americans living abroad.

Ms. Harris wants to raise the corporate tax rate to 28%. Although she hasn’t committed to fully repealing Mr. Trump’s signature law, she has said on that Mr. Trump’s tax cuts have gone “overwhelmingly to the wealthiest Americans and corporations and exploded the national deficit.”

Far from increasing the deficit, however, these tax breaks generated $200 billion more revenue in the first four years than the Congressional Budget Office expected without the cut, according to a study by The Heritage Foundation. The House Budget Committee similarly observed Mr. Trump’s tax cuts “resulted in economic growth that was a full percentage point above CBO’s forecast.”

The Democratic nominee does like Mr. Trump’s child tax credit and has vowed to expand it to families with low pay or no jobs, turning it into an income guarantee. She also wants to raise the credit to $3,000 per child — $3,600 for preschoolers and $6,000 for babies, raising annual costs $100 billion or more.

Ms. Harris has also proposed a $25,000 government-subsidized down payment for first-time homebuyers, a $50,000 tax credit for those who want to start small businesses and a tax on unrealized capital gains. But the details of that plan are murky.

The proposal is part of President Biden’s billionaire minimum income tax, which has been a feature of his annual budget submissions. The proposal would impose a minimum tax on total income, including “unrealized gains” or asset growth in excess of $100 million.

The policy “poses significant administrative and compliance challenges,” including liquidity concerns, possible gaming of the system and IRS disputes, Erica York, senior economist and research manager with the Tax Foundation’s Center for Federal Tax Policy, told CNBC.

“I still think it ends up being an unworkable proposal,” she said.

As vice president, Ms. Harris cast the tiebreaking vote in the Senate to pass the Inflation Reduction Act, which provided the IRS with $80 billion more to hire 87,000 new agents. Last month, the union representing IRS agents endorsed Ms. Harris.

Ms. Harris argues that increased enforcement will force millionaires and billionaires to “pay their fair share” in taxes, citing a Treasury Department statement that it had collected more than $1 billion from wealthy taxpayers since the law’s adoption. The Treasury insists it will not target households making less than $400,000 a year with audits.

A 2022 report from the Transactional Records Access Clearinghouse at Syracuse University, however, shows that households that earn less than $25,000 a year are more than five times as likely to be audited by the IRS as anyone else.

It will be up to the voters to decide whose policy proposals are more realistic.