Summary
While each candidate has very different spending and taxing plans, both plans add to our growing deficit. Over time, this will become a problem for our economy, as deficit spending leads to higher real interest rates and crowds out investment spending.
Below, we compare the Trump and Harris proposals in a chart below, which is subject to change based on each campaigns desire to adapt policy. Unified means the party has won both the House and Senate. Divided means they have not.
Fiscal Outlook: Trump Vs. Harris
Deficit Increase (+) Over The Next Decade in Different Scenarios
Relative to Current Law Baseline ($BN)
In practice, we would expect policy changes in the coming years to be far less dramatic than what either Trump or Harris has proposed. Below, we have outlined some of the most significant differences in the policies.
Tariffs
Trump has proposed both a 60% tariff on Chinese imports to increase revenue and a 10% universal import tariff. It is difficult to predict the ultimate extent of these tariffs. It may not be legal for Trump to impose a universal 10% tariff. If it is not legal or Trump decides not to go down this path, the desire to target countries other than China could ultimately devolve into country-by-country and product-specific tariffs. Under any scenario, tariffs are generally considered inflationary, with the consumer ultimately paying a higher price.
Harris would likely preserve the existing tariffs on China but not take any other significant trade actions.
Corporate Taxes
Trump proposes a 15% corporate tax rate, while Harris proposes a 28% corporate rate. Neither is likely to happen. Republicans in Congress are concerned about the deficit impact of extending the Tax Cuts and Jobs Act and are not likely to be inclined to add additional tax cuts. While Democrats are proposing a 28% corporate rate, a 25% rate is more plausible but could only be enacted if there is a Democratic sweep.
Tax Cuts and Jobs Act
Both candidates must confront the upcoming expiration of the Tax Cuts and Jobs Act (TCJA or the 2017 tax reforms), which, if fully extended, will add $4.7 trillion to the deficit. Trump has proposed extending the law in its entirety, while Harris would only extend it for individuals earning under $400,000.
Capital Gains Taxes
The Harris administration proposes imposing a 25% tax on the wealthiest Americans’ capital gains and income. The proposal is limited to those with net worths above $100 million, about 0.01% of the population. The underlying idea behind it is to address the issue of the super-wealthy paying little in taxes.
Trump’s policies have not addressed long-term capital gains to date. The Project 2025 initiative proposes a top 15% long-term capital gains tax rate.
Other
Harris and Democrats are focused on expanding the child tax credit. Other priorities include creating universal childcare and pre-K programs, permanently extending the expanded Affordable Care Act (ACA) premium credits, creating a paid leave program, and providing housing subsidies to first-time homebuyers.
Trump has proposed repealing the roughly $900 billion in subsidies in the Inflation Reduction Act (IRA) to pay for his initiatives. Other proposals include reversing Biden’s expansion of SNAP benefits (about a 25% reduction) as well as reversing Biden’s income-driven repayment reforms to student loans. This would mean higher student payment rates and less debt ultimately being canceled.
In contrast, Harris would maintain existing SNAP policies and probably try to cancel additional student loan debt as well as some medical debt.
Immigration Policy
Harris supports the bipartisan border deal that failed first in February 2024 and more recently in May 2024. Vice President Kamala Harris has reiterated Biden’s stance that the US immigration system is broken and requires a legislative fix.
Trump is proposing major changes to immigration policy. Mass deportation proposals are unlikely to get the necessary funding from Congress or compliance from blue states. He can significantly curb the flow of illegal immigration, though, through other means. The United States has never deported more than half a million immigrants per year. A mass deportation proposal raises questions: how would the United States possibly carry out the largest law enforcement operation in world history? And at what cost? Some conservative estimates exceed over $300 billion.