It seems like just about everyone who runs for president pledges to change the tax code in some fashion. But this year’s campaign promises are truly revolutionary.
The lion’s share of the radical tax proposals belong to Republican candidate Donald Trump. But Democratic nominee Kamala Harris also plans a couple of big shifts in direction.
Here are some radical ways Trump and Harris are promising to change taxes.
Making car loan interest fully tax-deductible
Candidate who has proposed this change: Trump
In an Oct. 10 speech to the Detroit Economic Club, Trump pledged to “make interest on car loans fully deductible.” He told the Motor City audience:
“That’s going to revolutionize your industry. This will stimulate massive domestic auto production and make car ownership dramatically more affordable for millions and millions of working American families. This is a phenomenal thing, if I do say so myself.”
This may sound radical, but it’s actually just a return to the past. All interest expenses — including interest associated with car loans and credit cards — were deductible until the Tax Reform Act of 1986.
Ending double taxation on Americans abroad
Candidate who has proposed this change: Trump
As it stands today, an American living in another country is likely to end up paying taxes twice — both to the country in which the individual is currently living and to the U.S. America is one of the very few countries in the world that taxes its citizens in this way, but Trump is pledging to change that.
The day before his Detroit speech, Trump told The Wall Street Journal that he plans to end double taxation on American citizens who live abroad. He has also rolled out a YouTube video in which he promises to make such taxation a thing of the past before soliciting the votes of Americans abroad:
“Once and for all, I’m going to end double taxation on our overseas citizens. You’ve been wanting this for years, and nobody has listened to you, and you deserve it, and I’m going to do it. It’s the right thing to do, and no American leader has ever been willing to stand up and commit to you the way that I have on many things, but this is a very important element for your safety, security and, frankly, for your wallet. But I’m not like everyone else. I get things done. When I say it, I get things done. So I’m going to get this done for you. It’s a big one, ending double taxation, and you are going to be very happy when I’m back in office and get it done for you. So I need you to get out and vote. Cast your vote today.”
Ending taxes on overtime
Candidate who has proposed this change: Trump
At a Sept. 13 rally in Arizona, Trump promised to eliminate taxes on overtime pay for workers:
“As part of our additional tax cuts, we will end all taxes on overtime. You know what that means? The people who work overtime are among the hardest-working citizens in our county, and for too long no one in Washington has been looking out for them. It’s time for the working man and woman to finally catch a break, and that’s what we’re doing.”
After Trump’s announcement, the Tax Foundation weighed in, saying the move “would significantly distort labor market decisions” by encouraging workers to take on more overtime work, which would in turn increase employers’ labor costs.
The foundation added that workers would likely gravitate to hourly or salaried non-exempt jobs unless the benefit of tax-free overtime is not extended to salaried employees who are exempt from federal overtime rules.
Ending taxes on Social Security benefits
Candidate who has proposed this change: Trump
One of Trump’s most controversial ideas has been his pledge to end all taxation of Social Security benefits. Trump announced this intention on his social media network, Truth Social, in July:
“SENIORS SHOULD NOT PAY TAX ON SOCIAL SECURITY!”
While this might sound good to Social Security recipients, the proposal stands to harm the Social Security program in the long run, as we detail in “3 Surprising Ways Trump Sounds ‘Blue’ — and 3 Ways Harris Appears ‘Red’.”
Ending taxes on tips
Candidate who has proposed this change: Both Trump and Harris
Trump was the first to announce his intention to end taxes on worker tips. He also included the promise to “… eliminate Taxes on Tips for millions of Restaurant and Hospitality Workers …” in his written campaign platform. The idea quickly received blowback.
When Harris entered the race, she surprised many by also embracing the notion of ending taxes on tips. She even added similar wording in her written platform, promising to “… eliminate taxes on tips for service and hospitality workers.”
Both candidates publicly announced their proposals for tax-free tips in Nevada, a crucial battleground state and one where the hospitality industry — and tipping — are major parts of the economy.
Creating a ‘billionaire minimum tax’
Candidate who has proposed this change: Harris
Income inequality is growing in America, but Harris hopes to help reverse that trend by instituting a minimum tax on billionaires.
While she has not offered any details about this proposal, her website says the following about Harris and her vice presidential pick, Minnesota Gov. Tim Walz:
“They will ensure the wealthiest Americans and the largest corporations pay their fair share, so we can take action to build up the middle class while reducing the deficit. This includes … enacting a billionaire minimum tax …”
What it means for you
While it’s common for presidential candidates to make tax-related promises, it’s uncommon for presidents to make good on them. Federal taxes are a matter of federal law, and changes to federal law can only be initiated by Congress.
This means it would be tough if not impossible for Trump to follow through on his tax proposals unless the Senate and House of Representatives are both controlled by Republicans come 2025. And it’d be tough if not impossible for Harris to follow through on her tax proposals unless both chambers of Congress are both controlled by Democrats.
In short, don’t put too much faith in any presidential candidate’s ability to deliver on tax-related promises.
