In an episode of the show 'In the Know,' ARK Invest's CEO, Cathie Wood, discussed how former President Donald Trump's economic proposals could shape the market while comparing them to America's initial economic strategies.
Wood pointed out that Trump's ideas about eliminating income taxes, adjusting taxes, and modifying regulations could reflect some policies from the early days of the United States, potentially affecting the country's financial landscape if he is re-elected.
Trump's tax policy: Reducing income and corporate taxes
Trump's campaign has voiced support for continuing the tax cuts of 2017, including reducing the top tax rate from 39.6% to 37%, a reduction expected to end in 2025.
Trump also proposed eliminating the cap on state and local income tax deductions, a change that analysts say would benefit high-income individuals, especially those in the top 10% income group.
Comparing Harris's tax plan for high-income earners
In contrast, Vice President Kamala Harris supports returning the top tax rate to 39.6% and has proposed taxing unearned income at 25% for individuals with a net worth over $100 million. This policy is expected to generate about $516 billion in the next decade.
Unlike Trump's proposal, which would expand benefits for wealthy Americans, Harris's plan would add new revenue sources targeting high-net-worth individuals.
Family benefits: Contrasting approaches
Regarding family policies, Trump has committed to maintaining the current child tax credit of $2,000 per child, while his running mate, Senator JD Vance, supports increasing that amount.
Harris has proposed a more expansive plan, including a $6,000 tax credit for infants, $3,600 for each child under six annually, and $3,000 for each child under 18. This proposal, aimed at restoring previous provisions of the Biden administration, is expected to cost $1.5 trillion over a decade.
For middle-income earners, Trump wants to lower taxes by exempting tips and overtime pay, with an estimated cost of $107 billion and $866 billion over ten years. Harris also proposed lowering tip taxes but limited to the entertainment and hospitality sectors, with an estimated cost of $62 billion over the same period.