Pulse on the Polls - What’s at Stake: Tax
Pulse on the Polls - What’s at Stake: Tax

As the 2024 presidential election approaches, Hanson Bridgett is examining what’s at stake for businesses in California and beyond. In this article, we highlight four notable tax issues on the ballot.
PLEASE NOTE: This content is not meant to inform voting decisions or serve as a voter guide in any way. We aim to provide timely, objective, and legally grounded pre- and post-election analysis on select issues and outcomes that may impact our business and client community. While we recognize and are sensitive to the deeply personal beliefs and highly emotional responses associated with the presidential election, the issues at stake, and the candidates themselves—our focus strictly pertains to identifying and analyzing potential market trends and outcomes relating to our practices without advocating for any political party or candidate.
Tax issues are getting plenty of attention this election cycle. That shouldn’t surprise given their impact on voter pocketbooks, but the presidential candidates have turned the spotlight even brighter with some attention-grabbing proposals.
Donald Trump recently vowed to make interest payments on car loans tax deductible and to eliminate taxes on overtime pay altogether. Kamala Harris has countered with headline makers of her own, including an expanded child tax credit. Both have embraced eliminating taxes on tips, although experts agree that implementing the idea would get messy.
All of those proposals affect the population at large. Here are four issues with particular impact on corporations, investment funds and/or the very wealthy—all of which could turn on the outcome of the presidential race, as well as which party controls Congress.
The Corporate Tax Rate
The candidates offer a stark contrast on the corporate taxes, including the corporate rate, which now stands at 21%. Neither is likely to achieve all that they have proposed without a strong majority in Congress favoring their position.
Harris wants it increased to 28%, while Trump would go in the opposite direction, cutting it to 15% for companies that make their products in the U.S. Harris’s broader corporate tax plan favors the little guys and demands more from their bigger counterparts. New small businesses would see their tax credit leap from $5,000 to $50,000, while companies that earn $1 billion or more would see their alternative minimum tax go from 15% to 21%. For public companies, Harris has also proposed quadrupling taxes on stock buybacks to 4%.
Trump’s plans are friendlier to big business. The corporate rate had been 35%, remember, before his 2017 Tax Cuts and Jobs Act (TCJA) reduced it to its present level. Trump has characterized his carrot of a 15% rate for companies making products in the U.S. as the centerpiece of his plan to spark a domestic manufacturing boom. Experts say that his proposal resembles a complex deduction—the Section 199 domestic production activities deduction—that was in place from 2004-17. Trump has also pledged to resuscitate an expiring TCJA deduction for owners of “pass-through” businesses, like partnerships popular with doctors and lawyers.
The Carried Interest Loophole
If Harris’s coattails are strong enough to bring Democratic majorities in both houses of Congress, we could see the end, or at least a modification, of the notorious “carried interest” tax loophole. For years, it has treated profits earned by hedge fund managers (i.e., carried interest) as capital gains, which are taxed at a lower rate than income. Harris’s plan calls for the IRS to treat carried interest like ordinary income for those earning more than $400,000.
This is one stubborn loophole, though. Democrats including President Biden have long promised to close it but failed to do so. Others have fallen short of their talk on it, too. In the 2016 race, then-candidate Trump said hedge fund managers were “getting away with murder” through the loophole, and that he would end it. In fact, the only change so far was a lengthening of the holding period for long term capital gain treatment to 3 years.
Outsized Tariffs on Chinese Goods
Trump has proposed a series of punitive tariffs, including a blanket 60% rate on imports originating from China. In general, Congress is not involved in tariff issues, so the tariff policies of the winner may largely be put into effect.
This is on top of others he has promised. A self-professed fan of tariffs, Trump has said he would add a tariff of at least 10% (he recently upped it to 20%) on all foreign goods. He has also threatened tariffs against countries thinking about dropping the U.S. dollar, vowing to impose 100% tariffs in response. The tariffs directed at China would only enhance the elevated tariffs he imposed on Chinese goods during his initial term in office.
Harris has criticized Trump’s across-the-board tariffs, but don’t take that to mean the China-specific duties would get rolled back in her administration. President Biden not only retained most of Trump’s tariffs on Chinese goods but introduced new ones like a 100% tariff on Chinese electric vehicles. Observers expect Harris to continue those policies.
Estate Taxes for Centi-Millionaires
Trump’s TCJA more than doubled the estate tax exemption, making estates up to $13.61 million per person exempt from taxation. Beyond that, estates are taxed at a flat 40%. With those provisions of the TCJA expiring in 2026, look for some action by Congress. Trump has said nothing but probably would push for a simple extension of existing law. Harris has endorsed the estate tax reforms in a Senate bill that would decrease the exemption to $3.5 million per person and increase estate tax rates. For ultra-high-net-worth individuals with estates of $93 million and above, the marginal rate would reach 65%. Although such estates are rare, two of the three cities in the world with the most “centi-millionaires” are in California: Los Angeles and San Francisco. Even if Harris is elected and the Democrats control both houses, Congress may resist a drastic decrease of the exemption due to inflation and other factors. An increase in the marginal estate tax rate to some number above 40% and to some threshold at or above $93 million may be symbolically easier to accomplish than a drastic reduction in the exemption.
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