Shifts in government policy rarely affect all social classes equally, especially when they are related to economics. For instance, new tax structures often seek to improve conditions for one class by raising rates on another, and regulatory policy changes tend to increase advantages for one class while imposing burdens on another.
Many of the changes being discussed by Donald Trump and Kamala Harris as they campaign for the 2024 US presidential election fit this category. From taxes to tariffs, several changes are being discussed on the campaign trail that would result in new benefits for some and new burdens for others.
Impact on the Upper Class
Taxes are always a topic of interest for the upper class, who shoulder a higher percentage of tax revenues than those in lower brackets. Kamala Harris has shared that she would increase taxes for high earners — those making more than $400,000 — primarily to address the need for increased funding for social security and other US entitlement programs.
A recent Wall Street Journal article described Harris’s proposed tax policy as picking up where the Biden administration left off, which would require higher taxes from high earners and corporations while lowering or holding steady those imposed on middle- and lower-class Americans. Harris has suggested increasing the tax rate from 21 — a figure set by Trump during his first presidency, which was brought down from the 35 percent figure set by the Obama Administration — to 28 percent for corporations.
Harris’s support for Biden’s 2025 budget proposal also signifies the possibility of a new unrealized capital gains tax. Specifically, the tax would apply to households worth more than $100 million and would annually levy a minimum tax of 25 percent of combined income and unrealized gains. Some experts refer to this tax, which targets those benefiting from unsold and unrealized assets, as a “wealth tax.”
Trump’s campaign indicates he would be focused on pro-business policies, which would generally favor the upper class since he does not support increasing taxes for high earners. He has said he’d support reducing the corporate tax rate to 15 percent.
One specific step Trump has said he will take involves extending the policies contained in the Tax Cuts and Jobs Act of 2017 (TCJA), which ushered in the 21 percent flat corporate tax rate. Many of the key tax adjustments contained in the act, including its reduced tax rates and revised brackets, begin expiring in 2025. The 2024 GOP Platform document available on Trump’s campaign website includes a promise to “make permanent” the provisions of the TCJA. Nonpartisan studies have shown that the majority of benefits gained by an extension of the act would go to the wealthy.
Impact on the Middle Class
Neither the Trump nor Harris camps have shared much detail on how they specifically intend to address the middle class, but some educated guesses can be made based on past actions and general attitudes.
The continuation of the TCJA Trump is seeking, for example, could bring some benefits to the middle class. Stats published by the US Internal Revenue Service in the first year after the TCJA took effect show that middle- and lower-class Americans received the biggest percentage tax cuts — 16 to 26 percent for those making $15,000 to $50,000, compared with 9 percent for those making at least $500,000.
A few other targets of the Trump campaign, however, could result in higher prices for the middle class. Repealing the Affordable Care Act, which Trump signaled he intended to do during his first presidency, would remove a wide range of affordable healthcare options that have been embraced by the middle and lower classes. Trump recently shared that he intends to improve — not repeal — the act but hasn’t offered details on what that would entail.
High trade tariffs, which Trump supported during his first term, could also negatively impact the middle class. As trade tariffs increase, domestic prices do as well, pushed higher by increased costs and reduced competition. Trump has proposed a 10 percent tariff on all products imported from overseas.
Harris’s camp has said it would also seek to impose “targeted and strategic tariffs,” but it hasn’t provided many details. The Biden Administration did not roll back the tariffs on Chinese products Trump had imposed. In fact, it proposed additional tariffs on trade with China, including a 100 percent tax on electric vehicles.
Overall, Harris has said she will seek to foster an “opportunity economy” that would boost middle-class buying power. Details regarding what that would look like and its anticipated impact have yet to emerge.
Impact on the Lower Class
Changes to the child tax credit is a key initiative with the potential to impact the lower class that has emerged from both camps. The TCJA, which Trump has said he will seek to extend, doubled the child tax credit. Harris has said she would also enhance the support the credit provides to families, including adding a new $6,000 credit that middle- and lower-class families would qualify for during the first year of a child’s life.
Eliminating taxes on tips, which both candidates have also shown support for, could be another change to tax policies to benefit the lower class. Trump has suggested a complete ban on tip taxes, including income and payroll taxes. Harris has supported a ban on federal income tax, but not payroll tax.
The impact on the upper class represents the biggest difference between the two candidates at this point, with Trump clearly offering more benefits to that segment of the population through tax and trade policies. For the remaining classes, both candidates have promised aid in varying degrees, but have yet to provide strong details on the practical steps they’ll take to make it a reality.
Aaron Cirksena is founder and CEO of MDRN Capital.
