Tracking Tax Plans for the 2024 Presidential Election

As the last couple of months of the U.S. presidential election season heats up, you may find yourself fielding questions from clients about the potential impact both candidates’ tax plans might have on their investment portfolios. After all, taxes affect most voters.

If we’ve learned nothing else over the last several election cycles, it’s challenging to predict the outcome. However, it’s not challenging to review the different tax proposals being put forward by the two candidates. Below, I will focus on proposals that will impact taxes related to long-term investors around mutual funds, ETFs, stocks, bonds, and similar investments.

Before any tax plan details, here are a few key observations I’ve learned over the years.

1. Campaigning on a tax plan and actually passing a tax plan are two very different things. During a campaign, ideas are easy to put forward. Once in office, tax code changes require agreement/compromise across:

a. President

b. Senate

c. House of Representatives

And even then, there are typically competing priorities with tax code changes. Consider President Biden had thin majorities in the House and Senate for his first two years and was unable to affect the U.S. tax code in any material fashion. And it was not for a lack of trying.

2. Tax plans tend to be purposely vague. As the saying goes, the devil is in the details.

3. We do know that absent government action (a plan across the aforementioned branches of government), tax rates for many are scheduled to change starting January 1, 2026, with the planned expiration of many of the individual provisions from the Tax Cuts and Jobs Act (TCJA) that was implemented in 2018. See our recent blog to review these expiring items

While Vice President Kamala Harris has not come out with a detailed tax plan, she has signaled her support of the Biden Administration’s most recent budget submittal along with verbiage from the recent 2024 Democratic Platform. Note that many of these changes were also proposed during then-candidate Biden’s tax plans in 2020.

Selected Democratic party proposed tax changes (all rates assume filing status of married filing jointly)

Republican party proposed tax changes

• Supports extending the individual provisions of the Tax Cuts & Jobs Act that are scheduled to sunset on 12/31/2025. See our recent blog for a review of these items.
• Lower corporate tax rate from 21% to 20%.
• Possibly increasing tariffs on imported goods in lieu of lowering certain income taxes. Note that many (most?) economists consider tariffs a form of indirect tax on consumers.

Not much in writing beyond the above.

Speaking with clients

As voters weigh the messages and draft proposals of this year’s two presidential candidates and as you prepare for year-end tax planning with clients, taxes will likely filter into your conversations. It’s not yet clear how each candidate’s platforms might impact tax rates.

But regardless of who wins in November, we believe it’s best to focus on long-term goals, realistic return expectations, and investment strategies that strive to maximize after-tax wealth – no matter what policies are in place.

And remember, campaigning and proposing tax changes are MUCH easier than actually building consensus across the White House, Senate, House, and interested parties (lobbyists) to pass material tax changes. It will likely be after the election and well into next year before we have any real clarity of what may actually change.

Please follow our blog as we all learn more about the intersection of tax policy and taxable investments.