Taxes are sure to be a hot topic at Tuesday’s presidential debate between Vice President Kamala Harris and former President Donald Trump. A lot of the 2017 Trump-GOP tax law, which mostly aids the rich, is set to expire at the end of 2025. Trump wants to permanently extend all the expiring provisions—at a cost of nearly $5 trillion—while the Biden-Harris administration wants to let those parts that exclusively benefit households with incomes over $400,000 expire on schedule. The Biden-Harris administration has in addition proposed reforms that would ensure the rich and big corporations pay a fairer share of tax, thereby narrowing economic inequality, raising revenue to lower costs and improve services for working families, and cut the national debt.
Based on their previous statements, here are claims each candidate is likely to make in the debate and how closely they conform to the truth:
DONALD TRUMP
LIKELY CLAIM: “My tax cuts went to the middle class, gave workers big raises and boosted the economy.”
TRUTH:
- The cuts were highly skewed to the rich. Next year, the 1% highest-income households (all with annual income over $830,000) will get an average tax cut of more than $60,000. Households in the top 0.1% ($4.7 million needed to qualify) will get a quarter million dollars ($252,000). Families in the middle of the income scale will get less than $3 a day.
- The lowest paid nine out of 10 workers got no pay raise at all from the corporate tax cut at the center of the Trump-GOP law. Stockholders got about half the tax-cut benefit, with the rest going to top executives and the highest-paid 10% of workers.
- Economic growth was the same in the two years after the cuts as the two years before. (It’s impossible to assess the impact of the Trump tax cuts after Covid scrambled the economy in 2020.)
LIKELY CLAIM: “Harris wants to raise taxes on the middle class by letting all my tax cuts expire.”
TRUTH: The Biden-Harris administration has been consistent in its pledge not to allow tax cuts to expire that would raise taxes on any household making less than $400.000 a year.
LIKELY CLAIM: “Harris would raise taxes on the middle class.”
TRUTH: All the proposed Biden-Harris tax reforms would raise taxes on the rich and corporations, while reducing taxes on working families.
The tax raisers include a new special tax on households worth more than $100 million, to end the scandal of tax-free billionaires (the Billionaire Minimum Income Tax); a higher capital-gains tax rate on households with over $1 million of income; a hike in the corporate tax rate to 28%; and a quadruple increase, to 4%, in the stock-buyback tax.
Meanwhile, Harris has proposed restoring the higher Child Tax Credit (CTC) that cut child poverty in half during the pandemic; and adding a new $6,000 CTC for the parents of newborns.
LIKELY CLAIM: “The Biden-Harris Billionaire Minimum Income Tax (BMIT) would tax the homes and retirement savings of middle-class households.”
TRUTH: The BMIT would only apply to households worth at least $100 million—about 64,000 in the whole country, or 0.02% of the total. But it would raise more than half a trillion dollars over 10 years that could be used to lower costs, improve services and increase opportunities for middle-class families.
KAMALA HARRIS
LIKELY CLAIM: “My plans would ensure the wealthy and big corporations pay a fairer share of taxes.”
TRUTH: The most recent Biden-Harris budget would increase taxes on the rich and big firms by over $5 trillion. Reforms include raising the corporate tax rate to 28%; establishing a Billionaire Minimum Income Tax; hiking the capital-gains tax rate on million-dollar incomes; and returning the top tax rate the rich pay on the highest part of their incomes to 39.6% from 37%.
LIKELY CLAIM: “Trump wants to cut taxes on big corporations and his billionaire buddies.”
TRUTH: Trump’s 2017 tax law cut the corporate tax rate by two-fifths, from 35% to 21%. He has recently proposed cutting it further, to 15%. A study of over 300 profitable corporations found that in the first five years of the Trump law the firms paid an average effective tax rate of just 14.1%. Twenty-three of them paid zero or got refunds. An average household in 2021 paid 14.9%.
Trump’s 2017 tax law overwhelmingly benefitted billionaires like him and other hyper-wealthy people. His intention to permanently extend the expiring parts of the law would do the same. The total wealth of American billionaires has doubled since enactment of the Trump tax law.