How a Trump or Harris presidency could affect different social classes

Changes in government policy rarely affect all social classes equally, especially when they are related to economics. For example, new tax structures often seek to improve conditions for one class by raising rates for another, and changes in regulatory policy often increase benefits for one class while burdening another.

Many of the changes that Donald Trump and Kamala Harris are discussing during their 2024 presidential campaign fall into this category. From taxes to tariffs, there are a variety of changes being discussed during the campaign that would result in new benefits for some and new burdens for others.

Impact on the upper class

Taxes are always a topic of interest for the upper class, which takes in a higher percentage of tax revenue than those in lower brackets. Kamala Harris has shared that she would raise taxes on high earners — those making more than $400,000 — largely to address the need for more funding for Social Security and other American entitlement programs.

A recent Wall Street JournalThe article described Harris’ proposed tax policy as a continuation of where the Biden administration left off, which would require higher taxes on high-income earners and corporations while cutting or holding taxes the same for middle- and lower-class Americans. Harris has proposed raising the tax rate from 21 percent — a figure set by Trump during his first presidency, which was reduced from the 35 percent set by the Obama administration — to 28 percent for corporations.

Harris’ support for Biden’s 2025 budget proposal also raises the possibility of a new tax on unrealized capital gains. The tax would specifically target households with more than $100 million in assets and would levy a minimum annual tax of 25 percent of combined income and unrealized gains. Some experts are calling the tax, which targets those who profit from unsold and unrealized assets, a “wealth tax.”

Trump’s campaign indicates that he would focus on pro-business policies, which would generally benefit the upper class, as he does not support raising taxes on high-income earners. He has said he would support cutting the corporate tax rate to 15 percent.

One specific step Trump has said he will take is to extend the policies in the Tax Cuts and Jobs Act of 2017 (TCJA), which established a flat 21 percent corporate tax rate. Many of the law’s key tax changes, including the lowered tax rates and revised brackets, expire in 2025. The 2024 GOP Platform document, available on Trump’s campaign website, includes a pledge to make the TCJA’s provisions “permanent.” Nonpartisan studies have shown that most of the benefits from extending the law would go to the wealthy.

Impact on the middle class

Neither Trump nor Harris have released many details about how they specifically plan to approach the middle class, but some educated guesses can be made based on past actions and general attitudes.

For example, the continuation of the TCJA that Trump is seeking could benefit the middle class. Statistics released by the U.S. Internal Revenue Service in the first year after the TCJA took effect show that middle- and lower-class Americans got the largest percentage tax cuts — 16 percent to 26 percent for people making $15,000 to $50,000, compared with 9 percent for people making at least $500,000.

A couple of other Trump campaign goals, however, could result in higher prices for the middle class. Repealing the Affordable Care Act, which Trump has indicated he wants to do during his first presidency, would eliminate a wide range of affordable health care options that the middle and lower classes have embraced. Trump recently said he plans to improve — not repeal — the law, but he hasn’t given any details about what that would entail.

High trade tariffs, which Trump supported during his first term, could also hurt the middle class. As trade tariffs rise, so do domestic prices, driven up by higher costs and reduced competition. Trump has proposed a 10 percent tariff on all products imported from overseas.

Harris’ camp has said it would also seek to impose “targeted and strategic tariffs,” but it has not provided many details. The Biden administration has not reversed the tariffs on Chinese products that Trump imposed. In fact, it has proposed additional tariffs on trade with China, including a 100 percent tax on electric vehicles.

Broadly speaking, Harris has said she will seek to create an “opportunity economy” that would increase middle-class purchasing power. Details of what that would look like and its expected impact have yet to emerge.

Impact on the lower class

Changes to the child tax credit are a major initiative with the potential to affect a lower class that has emerged from both camps. The TCJA, which Trump has said he wants to extend, doubled the child tax credit. Harris has said she will also improve the relief the credit provides to families, including adding a new $6,000 credit that middle- and lower-class families are eligible for during the first year of a child’s life.

Eliminating taxes on tips, which both candidates have also supported, could be another change in tax policy to benefit the lower class. Trump has proposed a complete ban on tip taxes, including both income and payroll taxes. Harris has supported a ban on federal income taxes, but not on payroll taxes.

The impact on the upper class represents the biggest difference between the two candidates at this point, with Trump clearly offering more benefits to that segment of the population through tax and trade policies. For the remaining classes, both candidates have promised varying degrees of aid, but have not yet provided clear details on the practical steps they will take to achieve it.

Aaron Cirksena is the founder and CEO of MDRN Capital.