Comparing Trump and Harris Tax Plans: Key Historical Context
Presidential candidates Donald Trump and Kamala Harris are proposing sweeping changes to the U.S. taxA tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. system. We have analyzed their plans against historical tax changes since 1940, comparing the average annual revenue impact of each law or proposal as a share of GDP over the years for which data is available.
Analyzing Projected Tax Increases and Decreases
Our analysis reveals that Harris’s proposal would be the 15th largest tax increase since 1940 and the 6th largest during non-war times. Trump’s proposed tariffs and tax modifications would result in the 6th largest tax cut since 1940. Notably, Trump suggests he might increase tariffsTariffs are taxes imposed by one country on goods imported from another country. Tariffs are trade barriers that raise prices, reduce available quantities of goods and services for US businesses and consumers, and create an economic burden on foreign exporters. autonomously, bypassing Congressional approval. If implemented without accompanying tax cuts, these tariff hikes would constitute the 7th largest tax increase since 1940 and the largest outside a wartime scenario.
Kamala Harris’s Tax Strategy
Harris proposes a mix of tax adjustments that will generate an estimated net increase of $1.7 trillion from 2025 to 2034, or an average of 0.5% of GDP. This reflects $4.1 trillion in tax increases (1.2% of GDP) balanced against $2.4 trillion in tax cuts and expanded credits (-0.7% of GDP). The plan is positioned as one of the most significant peacetime tax increases since 1940.
**Donald Trump’s Tax and Tariff Plans**
Trump plans a combination of tax cuts, tariff increases, and removal of tax credits derived from green energy, estimated to reduce taxes by $3 trillion from 2025 to 2034, averaging a 0.8% decline in GDP. This plan includes $7.8 trillion in tax cuts (-2.2% of GDP) and financial upsides, such as $921 billion from repealed tax credits (0.3% of GDP) and a rise in revenue from tariffs totaling $3.8 trillion (1.1% of GDP). Alfino sees his tariffs on Chinese goods reaching 60% and applying a 20% tariff on all imports, expecting this will mark a historically significant tax increase.
Historical Tax Increases and Decreases since 1940
Historically, the largest tax hikes occurred during wartime, notably from 1941 to 1951, ranging from 1.2% to 5% of GDP. In contrast, the Trump administration’s tariffs from 2018-2019 added only 0.1% to 0.2% of GDP, placing them as the 21st largest increase. The Inflation Reduction Act (IRA) enacted by Biden ranks 23rd, reflecting a 0.1% GDP increase during revenue-impact years.
Conclusion: Tax Plans in Historical Context
The most significant tax reductions were the Revenue Acts of the mid-20th century and the Economic Recovery Act of 1981. They cut revenues between 1.6% and 2.9% of GDP. Comparatively, the Tax Cuts and Jobs Act (TCJA) of 2017 under Trump ranks 10th, trimming taxes by 0.7% of GDP. Pandemic-related reductions under both Trump and Biden rank similarly, demonstrating the ongoing impact of legislative responses to economic shifts.
These insights show the potential impact of Harris and Trump’s tax strategies within a broader historical framework. By understanding these proposals’ context, we can better appreciate their potential influence on the nation’s economic landscape.
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