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As the 2024 presidential race intensifies, Kamala Harris and Donald Trump have laid out their economic plans, emphasizing different tax policies while surprisingly aligning on one issue: the elimination of federal taxes on tips.

Diverging on Corporate Tax Rates

Kamala Harris has proposed raising the corporate tax rate to 28%, seeking to partially reverse the Tax Cuts and Jobs Act (TCJA) of 2017, which lowered the rate to 21%. This increase, Harris argues, is vital for funding new initiatives, including an expanded child tax credit, healthcare reforms, and first-time homebuyer support. According to the Congressional Budget Office, each percentage point increase in the corporate tax rate could generate over $100 billion in additional revenue over the next decade.

In contrast, Donald Trump advocates for further reducing corporate taxes, building on the cuts enacted during his presidency. Trump argues that lower corporate taxes drive economic growth by encouraging business investment and competitiveness. He also seeks to extend the TCJA tax cuts, which are set to expire in 2025, ensuring that businesses continue to benefit from reduced tax burdens.

Agreement on Tip Tax Exemption

Despite their differences on corporate taxes, both Harris and Trump agree on eliminating federal taxes on tips, a policy that could impact millions of service and hospitality workers. Trump first proposed this idea, which gained attention during a rally in Nevada—a state with a significant number of tipped workers. Harris has endorsed a version of this proposal, likely targeting workers earning $75,000 or less and capping the amount of income that can be claimed as tips.

While this proposal aims to offer financial relief to millions of workers, experts express concerns about its potential cost and complexity. Some suggest that other measures, such as raising the minimum wage or eliminating the tipped minimum wage, might be more effective in supporting low-income workers.

Looking Ahead

The debate over tax policy in the 2024 election highlights the stark differences between Harris and Trump’s economic visions. Whether prioritizing revenue generation for social programs or fostering a business-friendly environment, both candidates are shaping the conversation on how best to support the American economy. As the election draws closer, these issues will likely play a pivotal role in voters’ decisions.