As new research from Empower shows that half of Americans believe the outcome of the 2024 Presidential election will directly impact their own personal finances (more below), two different analyses of how either a Kamala Harris presidency or a Donald Trump presidency would impact taxes and the national debt were released on Monday.
An analysis released Oct. 7 by the nonpartisan Committee for a Responsible Federal Budget suggests a Harris presidency could increase the national debt over 10 years by $3.5 trillion, while former President Trump’s proposals could add another $7.5 trillion onto the debt in that timeframe.
The projections are based on a comprehensive analysis of the candidates’ tax and spending plans that reflect the expected fiscal impact of policies on the candidates’ campaign websites and of policies that have been proposed through official campaign announcements, white papers, and social media posts.
The report notes that during the 2024 campaign, Vice President Harris has proposed to significantly expand the Child Tax Credit and other individual tax credits, increase support for housing and health care, lower taxes on tips, and strengthen border security. She has also called for spending and tax breaks for child care, education, long-term care, preschool, paid leave, domestic research and manufacturing, and small businesses; and she has expressed support for extending expiring provisions of the Tax Cuts & Jobs Act (TCJA) for households making under $400,000 per year.
President Trump, meanwhile, has proposed to modify and extend the TCJA, further cut taxes for corporations, increase military spending, strengthen border security, expand deportations and immigration enforcement, and increase support for housing, health care, and long-term care. He has also proposed ending the taxation of tip income, overtime pay, and Social Security benefits.
To help offset the costs of her plan, the analysis says Vice President Harris has proposed increasing taxes on corporations and high-income households and reducing prescription drug prices. Her campaign also says she supports the revenue-raising provisions in President Biden’s FY 2025 budget, which would further increase taxes on corporations and high-income households.
To help offset the costs of his plan, President Trump would impose new tariffs on imports; repeal energy- and environment-related spending, tax cuts, and regulations; cut fraudulent spending; and end the Department of Education.
“Under our central estimate, both plans would add substantially to the debt. Specifically, we find the Harris plan would add $3.50 trillion to the debt over the ten-year period from FY 2026 through 2035 and the Trump plan would add $7.50 trillion to the debt over that same period,” the report states.
In addition to the central estimate, the analysis also presents high- and low-cost estimates for each proposal, while acknowledging the difficulty of a precise estimate due to “a high degree of uncertainty” about the details.
“Under our low-cost estimate, we find the Harris plan would be roughly deficit neutral, while the Trump plan would increase the debt by $1.45 trillion,” the analysis states. “Under our high-cost estimate, we find the Harris plan would increase debt by $8.10 trillion, while the Trump plan would increase debt by $15.15 trillion.”
The CRFB warned in its analysis that the U.S. is on track to break the all-time record for the national debt’s share of GDP, which was previously set at 106% in 1946. The federal deficit is currently 99% of GDP and sits at $35 trillion. It would surpass the 1946 mark in 3 years.
Trump tax plan would cut taxes for richest 5%
“This is the most comprehensive analysis that anyone has done, and the findings are crystal clear,” said Amy Hanauer, ITEP’s Executive Director. “Trump’s tax proposals would substantially raise taxes on regular Americans while delivering more tax cuts to corporations and the wealthy.”
Also Monday, the Institute on Taxation and Economic Policy, a non-profit, non-partisan tax policy organization, released an analysis of Trump’s tax plan, finding the various proposals taken together would, on average, lead to a tax cut for the richest 5% of Americans and a tax increase for all other income groups.
If these proposals were in effect in 2026, the richest 1% (with incomes of $914,900 and above) would receive an average tax cut of about $36,300 and the next richest 4% (incomes between $360,000 and $914,900) would receive an average tax cut of about $7,200, the analysis states.
Americans in all other income groups would see, on average, a tax increase. For example, the middle 20% (incomes between $55,100 and $94,100) would face an average tax increase of more than $1,500 and the poorest 20% (incomes less than $28,600) would face an average tax increase of about $800.
Trump has offered several tax proposals, which are all included in these estimates:
- Extending the temporary provisions in Trump’s 2017 tax law that will otherwise expire at the end of 2025, except for the $10,000 cap on State and Local Tax (SALT) deductions, which Trump says he would not extend.
- Exempting certain types of income from taxes (overtime pay, tips, and Social Security benefits). Ending taxation on Social Security benefits alone is projected to add $1.3 trillion to the deficit.
- Reducing the corporate tax rate from 21% to 20% and then further reducing it to 15% for “companies that make their product in America.”
- Repealing tax credits enacted as part of President Biden’s Inflation Reduction Act that provide incentives for the production and use of green energy.
- Imposing a new 20% tariff on imported goods, with a higher rate of 60% for goods from China.
“Many of Trump’s proposals disproportionately benefit the well-off, like extending the 2017 tax changes and further cutting corporate taxes. Meanwhile his proposal for new broad-based tariffs would effectively raise taxes on everyone, with the greatest impact on working-class households,” said Steve Wamhoff, Federal Policy Director for ITEP. “The net result of these proposals would allow the richest 5 percent of Americans to shift some of their taxes to everyone else.”
The analysis found Trump’s proposed tax cuts on tips, overtime pay and Social Security benefits—which the GOP candidate has claimed would boost income for working-class families and encourage employers to hire more—would actually fall disproportionately to upper-middle-class earners, with only small or modest benefits flowing to low- and middle-income earners.
People making between $28,600 and $55,100 per year would see an average tax reduction of just $190 due to these provisions, the analysis found. But people making between $157,500 and $360,000 would see a much larger average tax reduction of $3,420.
Empower explores links between politics and personal finance
Beyond the U.S. economy, new research from Empower found one in two Americans believe the outcome of the 2024 Presidential election will directly impact their own personal finances.
More than 4 in 10 Americans (42%) believe the winner of the Presidential election will get inflation and prices under control, making things more affordable (47% men, 38% women) at a time when many Americans say they’re feeling “The Big Shrink.” One third (33%) say the winner of the Presidential election will make it easier to reach their personal financial goals, such as the 33% who say the victor will make it more affordable to buy a home (42% Millennials).
Notably, the research does not identify results based specifically on either a Trump win or a Harris win.
Further, 42% said the amount of money they have will be tangibly more or less depending on who wins. One third (33%) say their “Wallet Power”—or their overall ability to spend, save, and invest—will either shrink (33%) or increase (31%). More than a third (34%) believe the Presidential election is a major predictor of their retirement timeline and financial security, with 30% saying the winner will impact those plans, causing them to work longer, or have a shorter retirement (40% Gen Z, 39% Millennials).
“The adage is that ‘all politics is local’—and when it comes to money, it hits very close to home, with many Americans seeing a direct link between their own prosperity and the highest office in the land,” said Rebecca Rickert, Head of Communications at Empower. “From their retirement timeline to their account balances, people feel there is a lot riding on the outcome of the election in terms of their own financial happiness.”
People say they’ll make concrete money moves based on who wins: 41% will add more money to their emergency savings, save more cash (41% overall, 48% Millennials), and be more frugal with their spending (45%).
More Americans say they are more closely following the 2024 Presidential race than the stock market (67% vs. 33%), and half (53%) agree that uncertainty about the outcome of the Presidential election impacts the markets. One in four (23%) said they will invest more in the stock market based on the outcome of the Presidential election (32% Millennials) or change their asset allocation (34% Millennials). Nearly 1 in 5 (18%) plan to take more drastic measures, and say they will withdraw their money/liquidate their investments (27% Millennials).
Empower’s “The Ticket: Money and Politics” study is based on online survey responses from 2,200 Americans ages 18+ fielded by Morning Consult between July 22-24, 2024. The survey was weighted to be nationally representative of U.S. adults (aged 18+).
SEE ALSO:
• Where the Candidates Stand on Social Security
• Trump Calls for Elimination of Social Security Tax
• VP Debate Again Ignores Social Security Troubles
Veteran financial services industry journalist Brian Anderson joined 401(k) Specialist as Managing Editor in January 2019. He has led editorial content for a variety of well-known properties including Insurance Forums, Life Insurance Selling, National Underwriter Life & Health, and Senior Market Advisor. He has always maintained a focus on providing readers with timely, useful information intended to help them build their business.
