10/27/2024
Middle-Class Tax Benefits: Trump vs. Kamala Harris for the Upcoming Election
The Presidential Election:
A Focus on Criticism Over Solutions
As the presidential election approaches, it’s striking to observe how little emphasis candidates place on their potential contributions to America. Instead, we see a barrage of criticisms directed at each other, often overshadowing the pressing issues that truly matter to the American people. While political strategies and attacks may generate headlines, what Americans really need are leaders who can address inflation, reduce the deficit, and support the middle class.
The Need for Effective Leadership:
The majority of Americans identifying as middle class, it is crucial that the candidates focus on policies that uplift this vital segment of society. Both candidates must demonstrate how their tax plans will alleviate the financial pressures many families face. The current economic landscape, marked by rising prices and uncertainty, demands practical solutions rather than political theatrics.
An Unbiased Look at Tax Plans, To assist voters in making informed decisions, let’s lay out the tax plans proposed by the presidential candidates, without bias:
Trump Administration (Republican Perspective):
Tax Cuts and Jobs Act (TCJA):
Lower Tax Rates: Continued advocacy for maintaining the lower tax rates established under the TCJA, which reduced rates across all tax brackets, benefiting middle-class families.
Increased Standard Deduction: The standard deduction remains high, helping families reduce taxable income.
Child Tax Credit: Proposes retaining the expanded Child Tax Credit of $2,000 per child, emphasizing its importance for middle-class families.
SALT Deduction:
Advocates for a review of the $10,000 cap on state and local tax deductions, which help lower tax for the middle class, but affects taxpayers owning real estate living in high-tax states, for example NY, NJ, Washington DC and Hawaii.
Tax cut for smaller business owners:
The TCJA introduced a 20% deduction for qualified business income, effectively reducing the tax rate for many small business owners. If you earn income as a freelancer, you're classified as a sole proprietorship for tax purposes and report your income on Schedule C. Approximately 41 million middle-class Americans file tax returns using Schedule C.
Social Security Tax Exemptions for Seniors:
Support no tax for Social Security benefits, ensuring that seniors receive their benefits without added tax burdens..
Kamala Harris (Democratic Perspective):
American Families Plan:
Expanded Child Tax Credit: $3,600 Child Tax Credit for children under 6 and $3,000 for older children, fully refundable. This helped families with children under 17. Approximately 20-25% of American taxpayers claim the Child Tax Credit on their tax returns.
Universal Pre-K and Paid Family Leave: Advocates for measures that would provide support for families, indirectly benefiting middle-class workers.
Universal Pre-K and Paid Family Leave:
Advocates for measures that would provide support for families, indirectly benefiting middle-class workers.
Tax Policy:
Increased Taxes on High Earners:
Proposes raising taxes on individuals earning over $400,000 to fund middle-class earning under $400,000 aiming for a more equitable tax system.
SALT Deduction:
Supports increasing or eliminating the cap on SALT deductions, which would help middle-class families in high-tax states, example NY, NJ, Washington DC and Hawaii. .
Unrealized capital gains:
This leads to tax liabilities even if you haven't sold the asset. For example, if you hold a stock for a long time, you may face taxes on gains without having sold it. Similarly, if you own a home that has appreciated in value, you might also have to pay taxes on that unrealized gain. As of recent data, approximately 80% of middle-class households in the United States own their homes.
Social Security Tax Exemptions for Seniors:
Advocates for protecting and strengthening Social Security but has not proposed specific changes to the taxation of Social Security benefits,
Summary:
Trump's Approach:
Focuses on maintaining tax cuts, increasing the standard deduction, and possibly revising SALT deduction caps to help middle-class families while keeping Social Security benefits largely untaxed for lower-income seniors.
Harris's Approach:
Aims to expand child tax credits for families, raise taxes on higher earners to support middle-class initiatives, and reverse SALT deductions.
Conclusion:
In conclusion, while the current political climate may be rife with criticism, it is essential to focus on what truly matters: the policies that will enhance the lives of the majority of Americans. It’s time to assess which candidate offers a realistic plan for growth, stability, and support for the middle class.
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