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tax code
We Know How Bad Trump's Tax Policy Is, But Just How Good Will Harris' Be?
Harris wants to invest in the care economy and has signaled support for raising corporate tax rates, while Trump has been largely silent on care investments and signaled support for more tax cuts at the top.
Aug 25, 2024
U.S. Vice President Kamala Harris and former President Donald Trump have starkly different views on taxes and how the tax code can support families.
Harris voices strong support for families through investments in the care economy. She’s vowed to advance paid family leave, affordable childcare, care for disabled or aging family members, and healthcare. This could be funded with a better tax code.
These policies would help all of us care for our families and strengthen our communities. Investing public dollars in care could also narrow racial and gender pay gaps by boosting the pay of care workers—who are mostly women, and many of them women of color.
Strengthening care infrastructure would help us all thrive and make the economy stronger. But we need to collect sufficient revenue to support those transformational policies.
The Trump campaign has been largely silent on care investments. But his campaign has signaled support for more tax cuts at the top. Such cuts would increase inequality and reduce the availability of federal funding to strengthen the care economy.
We saw this in the 2017 tax law that former President Trump signed. It cut taxes for the wealthiest people and corporations, including cutting the effective tax rate for our largest corporations from an average 22% to an average 12.8%. It also preserved loopholes that allow some of the wealthiest corporations to avoid taxes on most—if not all—of their profits.
These tax cuts for the ultra wealthy led to huge losses in federal tax revenue and spiked the national debt, making it harder for the government to fund new investments in priorities that are important to families.
If reelected, Trump has said he wants to slash corporate taxes further—even though some billionaires pay a lower share of their income in taxes than nurses and teachers do.
By contrast, the Biden-Harris administration created a minimum corporate tax so the wealthiest corporations could no longer pay nothing, added a modest tax on stock buybacks, and funded the IRS to better collect taxes from corporations. These policies raised revenue for care investments and other priorities.
Going forward, Harris has signaled support for raising corporate tax rates, which are at historic lows, and closing loopholes.
Harris and Trump also have different priorities on taxes for families. As a senator, Harris championed a tax credit of $6,000 for married couples and $3,000 for single people in her Lift the Middle Class Act. This would have delivered 88% of its benefits to earners under $119,000.
Harris might not promote this specific plan going forward, but it suggests she’d aim to direct benefits to moderate earners instead of the wealthiest. More recently, she’s proposed expanding the Child Tax Credit and adding a $6,000 credit for families with newborns.
By contrast, the tax bill that Trump signed delivered more than half its benefits to the top 5% of households—those with incomes over $263,000. (Like Harris, Trump’s vice presidential nominee, J.D. Vance, has suggested a bigger Child Tax Credit. But Vance has also floated making people without children pay more taxes.)
Taxing the wealthiest and big corporations would support care investments and make our tax code more fair. Strengthening care infrastructure would help us all thrive and make the economy stronger. But we need to collect sufficient revenue to support those transformational policies.
There is strong public support for better care and for fairer taxes. Tax justice advocates should call on both the Harris and Trump campaigns to commit to a fairer tax system—and to use the money it would raise to invest in the childcare, elder care, and healthcare our families need.
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How Trump’s Tax Cuts Fueled Greedflation
Higher corporate taxes are both crucial for accountability and for ensuring that there’s far less incentive for executives to squeeze as much as they can from their customers.
May 16, 2024
Next year, when key provisions of President Trump’s 2017 tax breaks to the wealthy and corporations expire, we have an opportunity to get our money back.
I’m not just talking about all the foregone tax revenue we’ve lost because the rich have paid so little since 2017—though we should get that back, too. I’m talking about the money families have lost to corporate price gouging.
Let me explain.
In 2017, Republicans slashed the corporate tax rate from 35% to 21%, giving massive corporations their biggest tax windfall since Ronald Reagan was president. A few years later, as Americans emerged from a global pandemic, these same corporations drove up prices for families.
Congress raising the corporate tax rate in 2025 is an opportunity to recoup some of the truly obscene profits corporate America raked in during this period of economic upheaval for American families.
While inflation hamstrung workers and families, it didn’t make a dent in corporate profits. In fact, as many CEOs boasted themselves, it’s been a boon. Companies simply passed rising costs along to consumers—and then some, bringing in record profits as a result.
All told, corporate profit margins skyrocketed to 70 year-highs. And by the end of 2023, when Americans were beyond fed up, after-tax corporate profits hit an all-time record high of $2.8 trillion. My organization, Groundwork Collaborative, recently found that corporate profits drove over 50% of inflation in the second and third quarters of last year.
But why would a change in the corporate tax rate unleash the kind of rampant corporate profiteering we saw in the aftermath of the pandemic? Simple: It’s a lot more fun to gouge customers when you get to keep more of what you pull in.
Look at Procter & Gamble, which has raised the price of everything from toothpaste to diapers. Last year, the company pulled in more than $39 billion in profit.
If they had to pay the 35% statutory tax rate, they would have sent nearly $14 billion to Uncle Sam. Instead, they paid a 21% rate and, using loopholes, got to keep an extra $10 billion—which helped with their combined $16.4 billion worth of dividends and stock buybacks for shareholders.
Corporations did well from Trump’s corporate tax cuts, with executives getting big raises and shareholders receiving big buybacks. But the real bonus came when inflation hit. Corporations used the cover of supply chain issues and broader inflation to hike prices more than their higher input costs justified—and they didn’t have to worry about their tax bill.
Our tax code is exacerbating some of the worst corporate excesses, effectively “subsidizing corporate price gouging,” as Sen. Elizabeth Warren (D-Mass.) described it recently. But it’s not only that low tax rates incentivize companies to overcharge. Rock-bottom tax rates also make collusion more profitable, as we saw with Pioneer Oil.
Recently, the Federal Trade Commission barred former Pioneer Oil CEO Scott Sheffield from joining the board of ExxonMobil following their merger, because Sheffield allegedly colluded with OPEC to raise oil prices. As families struggled with higher energy costs, the oil and gas industry banded together to keep prices high, which according to one analyst accounted for 27% of inflation in 2021.
When the reward is higher with lower corporate taxes, executives like Sheffield are more willing to take the risk. Higher corporate taxes are both crucial for accountability and for ensuring that there’s far less incentive for executives to squeeze as much as they can from their customers.
Wall Street tycoons and CEOs didn’t take the heat of inflation—they fanned its flames and families got burned. It’s no wonder people overwhelmingly favor a tax code that’s no longer rigged for corporations, especially as they struggle with high prices.
Congress raising the corporate tax rate in 2025 is an opportunity to recoup some of the truly obscene profits corporate America raked in during this period of economic upheaval for American families. It’s time Americans got their money back.
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'Rigged' US Tax Code Blamed as Wealthy See Major Retirement Account Gains
"It is unacceptable that taxpayers are forced to spend billions of dollars subsidizing the retirement accounts of the wealthiest people in America," said Sen. Bernie Sanders.
Jul 28, 2023
A report published Thursday by the nonpartisan Government Accountability Office shows that the median retirement account balance of high-income U.S. households nearly doubled between 2007 and 2019 while those in the middle class saw their retirement savings stagnate—if they had savings at all.
The GAO report was commissioned by Sens. Bernie Sanders (I-Vt.) and Sheldon Whitehouse (D-R.I.), who both pointed to the massive subsidies the federal government provides to tax-advantaged retirement accounts such as 401(k)s and individual retirement accounts (IRAs).
Citing Treasury Department data, the GAO's new report notes that "the estimated federal tax expenditure, or annual net revenue forgone, for tax-preferred retirement accounts was over $195 billion in 2022."
Those tax benefits flow disproportionately to high-income households. Daniel Hemel, a professor at New York University School of Law, wrote last year that "as of 2019, nearly 29,000 taxpayers had amassed 'mega-IRAs'—individual retirement accounts with balances of $5 million or more—while half of American households had no retirement accounts at all."
"Overall," Hemel added, "according to the Congressional Budget Office, the top 10th of households reap a larger share of the income tax subsidy for retirement savings than the bottom 80%."
In a statement on Friday, Sanders said that "at a time when half of older Americans have no retirement savings at all, it is unacceptable that taxpayers are forced to spend billions of dollars subsidizing the retirement accounts of the wealthiest people in America."
"The same Republican politicians who support cutting Social Security have no problem providing massive tax breaks to subsidize the retirement accounts of the top 1%," Sanders continued. "In America today, 55% of seniors are trying to survive on less than $25,000 a year. Given that reality, our job is to make sure that the working class in our country are able to retire with the dignity and the respect that they deserve, not to provide more tax breaks to the billionaire class."
"Our rigged tax code is subsidizing the retirement of billionaires and leaving everyone else to foot the bill."
The GAO found that the median retirement account balance for high-income households was about $605,000 in 2019, roughly nine times the balance of middle-income households—$64,300.
"In 2007, the median for high-income households was about four times that of middle-income households (about $333,000 and $86,800, respectively)," the GAO report states.
The report observes that high-income individuals benefit disproportionately from tax-advantaged retirement accounts for several reasons, including because they're far more likely to work for organizations that "offer pensions plans and contribute to retirement savings accounts." Lower-income households rely more heavily on Social Security, which GOP lawmakers continue to attack.
Additionally, the report notes, "the generosity of retirement plans often increases with income, up to a certain income threshold."
As the Center on Budget and Policy Priorities explains, "the primary retirement tax subsidies allow people to contribute to accounts such as a traditional 401(k) or IRA plan on a pre-tax basis. That is, taxpayers can defer all taxes on retirement contributions and earnings until they withdraw the money in retirement, at which point it is taxed as ordinary income."
Whitehouse, the chair of the Senate Budget Committee, said Friday that "our rigged tax code is subsidizing the retirement of billionaires and leaving everyone else to foot the bill."
"As a result, wealthy households have nine times more saved than the average middle-class household, and just 10% of the lowest-income families have anything saved at all," the senator added. "Auto-enrollment in workplace retirement accounts would reduce the access gap and make it easier to save, but we must also protect Social Security for all and ensure the wealthy pay their fair share so that all can retire with financial security."
The GAO report comes months after a separate analysis by the Institute for Policy Studies (IPS) and Jobs With Justice highlighted the special treatment that corporate CEOs receive in the skewed U.S. tax code.
"Employees with 401(k) plans face hard caps on the amounts they can set aside in these accounts every year," the groups wrote. "By contrast, Section 409A of the tax code allows top corporate executives to place unlimited amounts in special 'nonqualified tax-deferred compensation' accounts."
At the end of 2021, IPS and Jobs With Justice found, leading U.S. CEOs had around $9 billion in special retirement accounts that aren't available to their employees.
Last year, Congress passed bipartisan legislation that expanded federal subsidies for retirement accounts, a move that critics said would likely worsen inequality.
As Hemel wrote after the House passed the bill, which was ultimately folded into the Consolidated Appropriations Act of 2023, "Bipartisan support for SECURE 2.0 is part of a decadeslong pattern: While loudly and proudly proclaiming that their goal is to nurture nest eggs for the working class, lawmakers have constructed a complex of tax shelters for the well-to-do."
"It's working out just fine for the financial institutions that manage assets in IRAs and 401(k)s," Hemel added. "The combined amount in those vehicles reached $21.6 trillion at the end of 2021—up fivefold since 2000—and the more money that pours in, the more that managers collect in fees."
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