Veteran adviser no doubt breaks down Harris, Trump tax proposals

U.S. elections often serve as vehicles to help introduce new policy proposals, as newly elected officials frequently cite recent votes of American citizens as referendums—or even mandates—in favor of the policy positions that candidates campaigned for.

This is especially true in presidential elections. And by the evening of November 5, voters will have cast their ballots, which will ultimately choose either Kamala Harris or Donald Trump as the next president of the United States.

From Pension Daily: Tax proposals – Harris plans vs. Trump

On tax policy, explains Pension Daily editor Robert Powell, competing proposals from each side are hot topics in the final weeks of the campaign.

So Powell recently brought together tax experts Steve Siegel of the Siegel Group and Robert Keebler of Keebler & Associates to examine some of the nitty-gritty details, paying particular attention to the important elements that tax advisors and their clients should consider. .

Don’t miss the move: Subscribe to TheStreet’s free daily newsletter

A word of caution in fiscal policy is quickly addressed

As a first point of business, Siegel mentioned an important caveat for any discussion about tax policy that might result from a national election, whether Harris or Trump wins.

That is, unless the party of the winning presidential candidate also wins majorities in both the House of Representatives and the Senate, few of each candidate’s proposals will have legislative power.

“Some of these plans are so diverse between one side and the other that a compromise seems unlikely,” Siegel said.

More about taxes:

• 6 Tax Planning Strategies to Maximize Your Savings This Fall
• The Truth Behind Kamala Harris’ Unrealized Capital Gains Tax Crisis
• The importance of proactive taxation and succession planning

But if either the Democrats or the Republicans win both houses of Congress in addition to the presidency and can pass a law earlier than the end of 2025, the tax requirements for Americans would be passed at a faster pace.

Siegel explained that Congress would have a chance to pass a law by November or December 2025, and that they usually take effect the following year.

“But … there is the potential for some things to become retroactive, which suggests we can’t allow clients to wait and see what happens for a very long time,” he added, referring to the thoughts of taxpayers seeking advice .

A couple is seen reviewing their tax forms. The tax policies proposed by Kamala Harris and Donald Trump show some preferences in the priorities of each candidate.

Getty Images

Harris and Trump differ on individual income tax plans

A quick look at the likely plans for individual income taxes reveals some differences between the proposals championed by Harris and Trump.

For example, Harris proposes exempting tip income from taxation, expanding the child tax credit to $6,000, expanding the earned income tax credit for filers who don’t claim children, and expanding housing tax credits and tax credits for premium, Powell explained.

There are also reports that Harris would bring back the top income tax rate of 39.6% for people earning $400,000 or more and raise the net investment income tax from 3.8% to 5% . In addition, she supports a minimum income tax of 25% for individuals with wealth of $100 million or more.

Related: Two key fiscal moves to make before the end of 2024

Trump has indicated he will make permanent the expiring income tax cuts enacted in 2017, Powell said. He would also consider replacing personal income taxes with increased rates, expanding the child tax credit to $5,000 and exempting tips from income tax.

“For anyone over that $100 million threshold, you need to immediately initiate a discussion with your CPA and attorney to see if there are chess moves available,” Keebler said.

“Moving from a 37% tax rate to 39.6% means evaluating Roth conversions,” he added. “The tax change from 3.8% to 5% is significant over time, but there’s not much we can do to plan for that other than work to accelerate revenue in 2024 and probably 2025.”

“They may be retroactive, but more likely they would come into effect on January 1, 2026.”

Related: Veteran fund manager sees world of pain coming for stocks