Ag Policy Blog

OMAHA (DTN) -- The fiscal plans for Vice President Kamala Harris and former President Donald Trump would each raise the national debt over the next decade, though a new budget analysis shows Trump's plans would increase the debt by twice as much.

Under their current tax plans and government spending, Trump's plans would raise the national debt by an average of $7.5 trillion over 10 years, while Harris' plan would raise the debt $3.5 trillion. Both candidates would end up with trillions more in annual borrowing to make up for the holes in their budgets.

On the high end, Harris' plans could add $8.1 trillion to the debt over 10 years, and Trump's plans could increase the debt as much as $15.15 trillion.

The analysis was conducted by the nonpartisan Committee for a Responsible Federal Budget (CRFB), which noted "neither major candidate running in the 2024 presidential election has put forward a plan to address this rising debt burden."

Tax plans are critical for both candidates because nearly every major provision of the 2017 Tax Cuts and Jobs Act (TCJA) will start to sunset at the end of 2025. With Congress projected to be nearly evenly split again -- even if one or both chambers flip -- a new Congress and new president will have to come to some type of terms on a replacement for the tax law.

HARRIS TAX PLAN

Harris has proposed maintaining provisions of the TCJA for families making less than $400,000 per year. Her plan calls for expanding the Child Tax Credit and the Earned Income Tax Credit for lower-income people, and she has called for exempting tips from income taxes.

Harris also has some big spending plans. Her plans to help make housing more affordable -- a four-year $25,000 first-time homebuyers tax credit -- and boosts in other low-income housing would cost $250 billion over 10 years.

Harris also wants to extend and expand the Affordable Care Act, which would cost $550 billion over 10 years. Expanding access and funding for pre-K and childcare would cost $700 billion over 10 years. National family paid leave would cost $350 billion over 10 years. Plans to help reduce the costs of higher education are estimated to cost $350 billion. Helping seniors with home health care and other benefits would add another $200 billion.

Harris' plan to improve border security isn't as extensive as Trump's deportation measure, but the costs of tightening the border and adding more border security would cost about $100 billion over 10 years.

Offsetting some of her tax and spending, Harris wants to increase the corporate tax rate from 21% to 28%, which would generate an estimated $900 billion over 10 years.

Another key area in Harris' plan is raising the long-term capital gains from 20% to 28% for households making over $1 million per year. Harris also wants to institute a "billionaire minimum tax" on wealthy people who have unrealized capital gains. The Biden administration had proposed a 25% minimum tax for households with $100 million in wealth.

As part of those capital-gains measures, the Biden administration proposed to repeal stepped-up basis for wealthy households as well. This has been an area of concern with groups such as the American Farm Bureau Federation, which has opposed changes that would eliminate stepped-up basis for families handing down their farm. Harris supporters have said the change in stepped-up basis would only apply to people with $100 million or more in assets.

TRUMP TAX AND TARIFF PLAN

Trump would make permanent the TCJA in full at a cost of $5.35 trillion over 10 years. He also has called for exempting overtime from income taxes, which would add another $2 trillion to costs, and ending taxes on Social Security benefits at a cost of $1.3 trillion.

Trump also wants to lower the corporate tax rate for domestic manufacturers from 21% to 15% for companies that are not outsourcing U.S. jobs. He also has proposed to exempt tip income from taxes. He also recently called for ending or modifying the current $10,000 cap on the deduction of state and local taxes (SALT).

Trump's plans to deport millions of illegal immigrants, spend more on border enforcement and tighten immigration policies would also reduce the number of people paying federal taxes, creating a $350 billion net loss in federal revenue over 10 years.

Combined, Trump's tax proposals and proposed increases in spending would cost about $10.2 trillion over 10 years.

The former president offsets some of his tax proposals with a baseline 10% to 20% tariff on all imported products and a potential 60% tariff on imports from China. Those tariffs are projected to garner $2.7 trillion over 10 years. The CRFB also acknowledges there are other impacts from the tariffs. The Tax Foundation pegged the impacts of Trump's tariffs would lower U.S. gross domestic product by roughly 1.2%. Other geopolitical or trade percussions would occur.

"Due to the novelty of this policy, the true economic impact is hard to predict."

Trump would also offset some of his tax plans by rolling back and rescinding any unspent funds from the Inflation Reduction Act and repealing Biden administration rules on vehicle emissions as well as expanding drilling for fossil fuels. Combined, these changes are projected to generate $750 billion in savings.

For a full breakdown of the tax proposals and impact on the federal budget, see: https://www.crfb.org/….

Also see "Farm Leaders Reveal Sharp Contrasts for Agriculture Under Harris and Trump Presidencies" here: https://www.dtnpf.com/… and "Presidential Candidates Answer AFBF Questions on Ag, Rural America" here: https://www.dtnpf.com/….

Chris Clayton can be reached at Chris.Clayton@dtn.com

Follow him on social platform X @ChrisClaytonDTN

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