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taxes
On Taxes, a Sharp Campaign Contrast Between Harris and Trump
The Harris campaign seems eager to tax the rich and corporations while Trump vows to preserve and expand tax cuts for the wealthiest and says little about how to pay for that.
Sep 09, 2024
As U.S. Vice President Kamala Harris and former President Donald Trump get ready to debate for the first time this week, what can we expect from their campaigns in terms of taxes?
Harris endorses multiple proposals to generate revenue from the richest people and the biggest corporations and deliver a middle-class tax cut—with the former paying for the latter. Trump would cut some middle-class taxes but promotes a new tariff tax on imports that would hike the price of nearly everything Americans purchase and, doubling down on past practice, he’d slash taxes for millionaires and corporations. He hasn’t identified a single business or billionaire that should pay more.
When Trump and congressional Republicans passed the 2017 tax law, they made massive tax cuts for corporations permanent but set the individual cuts, which were heavily skewed to the extremely wealthy, to expire at the end of 2025. This means taxes are on next year’s policy agenda in a way that rarely comes along. The approaches articulated by the campaigns would pull the nation in profoundly different directions.
Trump Proposals
Trump says he would again slash corporate tax rates, keep all corporate cuts from the 2017 tax law, extend 2017’s expiring cuts for everyone including the uber-wealthy, and impose large tariffs that fall on everyone who spends money on anything.
Trump’s tariff tax proposals—60% tariff taxes on imports from China and 20% on all other imports—would cost the typical American household over $2,600 a year according to economist Kim Clausing. Earlier analysis of a previously-discussed 10 percent worldwide tariff tax shows an increase in inflation resulting from the plan, which would also generate $2.8 trillion in revenue over the next decade, raised from consumers.
Much of that revenue would go to corporations. When lawmakers cut the corporate rate from 35% to 21% in 2017, corporate tax payments plummeted, and huge, profitable corporations continued to pay far below the statutory rate. We’d see this on steroids if Trump slashed the corporate rate to 15%. Such cuts increase income and racial inequality and send a massive windfall—40 cents of every dollar—to foreign investors.
The law that the Trump administration passed in 2017 delivered enormous tax cuts to those in the top 1%, a narrow sliver of well-off people with income over $800,000 a year. These individual cuts for the rich expire in 2025, but the Trump campaign wants to make them permanent, sending almost two-thirds of that money to the richest fifth of Americans. This would cost more than $280 billion in 2026 alone, slashing revenue that could otherwise provide tax cuts for middle-income Americans, reduce the national debt, or fund childcare, healthcare, or infrastructure.
Republican Vice Presidential candidate J.D. Vance has mentioned more than doubling the Child Tax Credit but has provided few details and Trump has not signed on.
Harris Proposals
Harris backs most of the revenue raisers and middle class tax cuts laid out in President Joe Biden’s 2025 budget. The revenue components raise nearly $5 trillion over a decade, entirely from wealthy people and corporations, reducing inequality, both economic and racial, and generating funds for things the American people need.
Harris plans to boost revenue from corporations by raising the corporate rate, increasing the corporate minimum tax, increasing the stock buyback tax, and reining in corporate offshore tax avoidance. She’d better tax the wealthy by allowing expiration of the parts of the 2017 tax law that exclusively help those making more than $400,000. For those who make over $1 million a year, Harris would eliminate tax breaks on capital gains and dividends. For incomes exceeding $100 million a year, she’d tax currently exempt investment income that many billionaire CEOs receive. These provisions would do much to reform a tax code that most Americans say raises too little from corporations and the wealthy.
Harris would fully extend temporary tax cuts from the 2017 tax law for people earning less than $400,000 and try a new down-payment assistance program for some first-time homebuyers. She’d also expand the Child Tax Credit to $6,000 for newborns, $3,600 for children up to age five, and $3,000 for older children. This is one of the best and most well-proven ways to cut poverty, reduce inequality, and help middle-class families.
Tip Gimmick
Both campaigns support eliminating taxes on tips. This could encourage wealthy professionals to reclassify fees as tips and there are better ways to help workers—raising the minimum wage, eliminating the paltry $2.13 sub-minimum wage, and increasing the Earned Income Tax Credit. Harris would limit her exemption to workers earning less than $75,000—an improvement Trump leaves out—but this doesn’t redeem a fundamentally flawed proposal.
In Sum
Campaign proposals reveal two very different paths. The Harris campaign seems eager to tax the rich and corporations, cut taxes for middle-income taxpayers, reduce poverty, reduce inequality, and raise revenue for public spending. Trump vows to preserve and expand tax cuts for the wealthiest people and corporations and says little about how to pay for that beyond a tariff that raises much less than Harris’ plans and falls on consumers. His proposals would inevitably force cuts to important public programs or run up the national debt.
The entire tax code is up for debate in 2025. Our system asks far too little of wealthy people and corporations. Americans should listen closely to both campaigns and push for policies that raise more from those most able to pay, give tax cuts to those who most need them, and generate resources to invest in public priorities.
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Tax Prep Companies’ Business Model Exploits Low-Income Payers
The average parent in low-income communities is being bombarded with advertising designed to trick them into wasting their hard-earned money that could otherwise be going to groceries, gas, and other necessities.
Apr 16, 2024
How far could an extra nine hours and $150 go for you and your family? That’s how much Intuit’s TurboTax and H&R Block are taking from their average customer in low-income neighborhoods. Many of these customers don’t know that they can access these services for free—and that’s intentional. The average parent in low-income communities is being bombarded with advertising designed to trick them into wasting their hard-earned money that could otherwise be going to groceries, gas, and other necessities.
With Tax Day just passed, corporate tax prep giants are trying to extract every last dollar they can from Black communities and working-class taxpayers. A new report in partnership with Better IRS, titled Preying Preparers: How Storefront Tax Preparation Companies Target Low-Income Black and Brown Communities sounds the alarm on how exploiting low-income taxpayers is core to the business model of tax prep companies.
As it stands, 70% of taxpayers are eligible to file their taxes for free, but less than 3% have actually used the failed, corporate-backed free file service. The overwhelming majority of qualifying taxpayers are being coerced by unscrupulous corporate practices like deceptive advertising, overcharging, or hiding the free options.
Now that the IRS has made Direct File a free option, we call on the agency to expand the program.
Tax prep companies rely on and take advantage of economically disadvantaged communities. In fact, areas with the most people claiming the Earned Income Tax Credit have 75% more tax preparers for each person filing taxes compared to areas with fewer people claiming the credit. Furthermore, these major companies primarily hire what are called “unenrolled” tax preparers who lack expertise, certification, or credentials in tax rules and policy. Tax prep companies bank on their proximity, non-stop advertisement, celebrity endorsements, sweepstakes, and giveaways to legitimize their illegitimacy.
Unsurprisingly, companies like H&R Block have dismissed our report by noting the prolific number of locations, the years of experience of their preparers, and their 100% accuracy guarantee. They believe that because there are 9,000 locations across 50 states and most Americans live within five miles of one of their stores, then surely they must be helping hardworking families.
What this actually confirms is that H&R Block preys on low-income communities and communities of color by saturating the neighborhoods of targeted EITC-eligible taxpayers. Additionally, admitting unqualified preparers have been filing taxes for an average of 10 years or more is cause for concern. The predatory locations and disproportionate filing of EITC-eligible tax returns can both explain why Black taxpayers are audited at higher rates than their counterparts and why many people fail to take the deduction even though they are eligible. In this instance, correlation is causation.
These companies claim they are operating within the rules of the game—of which there are none. In 2010, the IRS tried to regulate the practice citing “an abysmal failure rate among unenrolled preparers” and pointing out that 1 in 4 of the 84,000 unenrolled preparers who took the competency exam failed, and more than 320,000 others never took it. That’s why we’re asking for accountability and for regulation of these tax preparers.
The introduction of the IRS Direct File pilot program represents a significant opportunity to dismantle economic inequality in our tax system. Direct File provides a much-needed alternative to costly tax preparation services in 12 states. This service is simple, free, readily available online, and a step in the right direction that empowers working-class people with an option to keep money in their pockets.
In the fight against corporate greed, we stand firm in our resolve. It’s time to hold these giants accountable, to empower the working class, and to build a fairer, more just system for all. Recent enforcement actions by the Federal Trade Commission are an important step; the public should know if they were overcharged and by how much.
With overwhelming public support for IRS modernization, including competency exams to ensure accountability and professionalism, the time for change is now. Now that the IRS has made Direct File a free option, we call on the agency to expand the program. The pursuit of an economy that works for everyone is ongoing. It starts with holding corporations accountable for their exploitative practices, advocating for policy solutions that prioritize the needs of working-class individuals, and ensuring equal access to resources and opportunities for all tax-payers.
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Biden's Bid to Tax the Rich Could Be the 2024 Lift the President Needs
New polling finds a majority of Americans across party lines support raising taxes on billionaires.
Mar 27, 2024
During his State of the Union address, U.S. President Joe Biden declared that he wants to raise taxes on the rich, and polling results published Tuesday show that both Democratic and Republican voters in important swing states support doing so.
The polling firm Morning Consult reports that 69% of registered voters in seven swing states say they support raising taxes on billionaires. That includes states like Michigan, Wisconsin, and Pennsylvania.
One of the most consistently popular policy proposals, across parties, is raising taxes on the rich. https://t.co/1fwJK5z0EN
— David Roberts (@drvolts) March 26, 2024
The poll found 58% of Republicans, 83% of Democrats, and 66% of independents support raising taxes on billionaires. The poll also found similar numbers of voters support raising taxes on people who make more than $400,000 per year.
Biden's 2025 budget plan includes a hike in taxes on the rich that would generate significant revenue for the federal government.
"Biden proposes to raise $503 billion over the next decade by imposing a 25% tax on people who claim more than $100 million in assets—a source of wealth that has long been beyond the reach of the [Internal Revenue Service]," The Washington Postreports.
In a New York Times opinion piece that was published on Wednesday, Felicia Wong, president and chief executive of the progressive advocacy organization Roosevelt Forward, outlined how opinions have changed about how much wealth is too much and if it should be more heavily taxed.
"Should we have trillionaires? Should we even have billionaires? According to at least one recent analysis, the economy is on track to mint its first trillionaire—that is 1,000 billion—within a decade. Such staggering accumulations of wealth are made possible in large part by the fact that America's federal tax burden is so comparatively light," Wong wrote. "After a long period of seeming to venerate the 1 %, or the 1% of 1% of 1%, American sentiment is swinging hard against this imbalance."
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