The Morning: The stakes on taxes

Plus, Israel, China's economy and European tourism.

View in browser|nytimes.com September 3, 2024 By German Lopez Good morning. We're covering the presidential candidates' positions on taxes — plus, Israel, China's economy and European tourism. Donald Trump Doug Mills/The New York Times Harris and Trump on taxes Today, we are starting a series called The Stakes covering the major issues of the campaign. Regardless of who wins the election, the next president will quickly have to deal with major changes to the tax code. That's because a set of tax cuts enacted by Donald Trump in 2017 will expire next year, and Congress will decide which tax cuts to keep, end or expand. Of all the campaign policy issues, this one is the most likely to hurt, or help, your finances. Trump has proposed tax changes that would largely benefit the wealthy and corporations. He has also called for new tariffs — taxes on foreign goods — that would raise prices for everyone. Kamala Harris, like President Biden before her, has promised to reduce taxes for lower and middle earners and increase taxes on the rich. She has not proposed new tariffs, although she has not ruled them out. Below, I'll explain how these plans could affect you. This newsletter is the first in a series we'll run between now and Election Day. In it, Times journalists will focus on the policy stakes of the 2024 election — and how life would be different under a Harris administration or a Trump administration. We'll examine other subjects, including abortion, democracy and immigration, in future newsletters. The tax cuts Trump campaigned in 2016 on a promise to slash tax rates. He delivered tax cuts in his first year in office. The 2017 cuts largely benefited the wealthy and corporations. But they also included some reductions for low- and middle-income Americans. Most of the 2017 cuts will expire next year, and members of Congress are preparing for a fight. Trump wants to extend everything — and go further. He has proposed eliminating taxes on tips and Social Security benefits and reducing the corporate tax rate to 15 percent, from 21 percent. He argues the cut would leave businesses with more money to grow, spend and hire, helping the economy. Trump's plan would add $5.8 trillion to the debt over 10 years, according to the Penn Wharton Budget Model. That would expand a national debt and a budget deficit that many economists already consider concerningly large. Harris says she would leave the 2017 tax cuts in place for people earning up to $400,000 per year but raise rates for those who earn more. She argues that the rich can afford higher taxes to pay for policies that help everyone else, including an expanded child tax credit for parents. Like Trump, she favors eliminating taxes on tips. Harris's plan would add $1.2 trillion to the debt over 10 years, the Penn Wharton Budget Model found. She has promised to reduce the deficit but has not specified how she would make up for the budget shortfall in her current proposals. Vice President Kamala Harris Jamie Kelter Davis for The New York Times The tariffs Over the past decade, Democrats and Republicans have shifted from the bipartisan free trade paradigm of the 1990s and 2000s. They have increased tariffs on foreign industries that produce cheaper goods than their U.S. counterparts. For example, Biden has imposed a 100 percent tariff on Chinese electric cars. Trump wants to go further. He has suggested a 10 to 20 percent tariff on all foreign goods, along with a 60 percent tariff on all imports from China. Harris comes from the Biden administration, which has used tariffs on a more limited basis than Trump has proposed. She has criticized Trump's tariffs as too broad — describing them as "a Trump tax on gas, a Trump tax on food, a Trump tax on clothing, a Trump tax on over-the-counter medication." Supporters of tariffs argue that they would not increase prices — that foreign businesses would eat the cost instead of passing it on to consumers. But historically that's not true. In fact, the purpose of a tariff is to increase prices. American products are generally more expensive than those made in China, Mexico and other low-income countries because labor costs are higher here. Tariffs try to level the playing field by increasing prices for foreign goods. In a recent interview with NBC News, JD Vance, Trump's running mate, argued that the tariffs would reinvigorate U.S. production. "Anything that you lose on the tariff from the perspective of the consumer, you gain in higher wages, so you're ultimately much better off," Vance claimed. New tariffs could also raise revenue, but not enough to make up for the deficits from either candidate's tax cuts. The plans' impact How would the tax plans affect actual people? A middle-class household with $80,000 in income would gain $1,700 after taxes under Trump's plan and $2,200 under Harris's, according to the Penn Wharton Budget Model. A household in the top 0.1 percent, with $14 million in income, would gain $377,000 under Trump and lose $167,000 under Harris. Those numbers, however, do not include the impact of tariffs. If they are included, Trump's plan would actually reduce a middle-class household's after-tax income by $1,700, the Peterson Institute for International Economics found. Wealthy households' after-tax income would still increase. Since Harris hasn't proposed new tariffs, her numbers are unchanged. How much of this will happen? Federal law allows the president to unilaterally impose tariffs, making at least some new ones likely. The tax cut extensions are less certain. They require congressional approval, so the winners of this year's 468 House and Senate elections will play a big role in dictating your future tax rates. Related: Republicans often enact tax cuts that are temporary, but once people get used to paying less, it becomes hard for Democrats to reverse them. Senator Elizabeth Warren has called this the "tax doom loop." More on the election The alliance between Trump and Robert F. Kennedy Jr. was the result of six weeks of behind-the-scenes discussions. Read about how the partnership took shape. Vance has been misrepresenting some of Harris's policies. Here's a fact check. Many of Nikki Haley's supporters dreaded having to vote for either Trump or Biden. Harris's entry into the race has changed their calculus. The discussion about misinformation online has long focused on the right. In recent weeks, however, the left has also been sharing conspiracy theories. THE LATEST NEWS Israel-Hamas War The funeral of Hersh Goldberg-Polin. Avishag Shaar-Yashuv for The New York Times Benjamin Netanyahu vowed to maintain his conditions for a cease-fire in Gaza in his first news conference since the protests that followed the recovery of six hostages' bodies. "Finally, you're free": Thousands gathered in Jerusalem for the funeral of Hersh Goldberg-Polin, an Israeli American citizen and one of the six hostages found over the weekend. Biden, when asked whether Netanyahu was doing enough to secure a deal to free the hostages, simply replied, "No." The families of several American hostages still held in Gaza called for an immediate cease-fire agreement. "More military pressure brings more dead hostages," the father of one captive said. Britain announced that it would suspend the export of some weapons to Israel. China A collapse in real estate has put pressure on the Chinese economy. Consumers have become increasingly frugal and businesses are cutting costs. Record rainfall has spoiled crops and caused the cost of vegetables to soar across China. Snapping turtles, tissue boxes and college students looking for part-time jobs: China has a long, unusual list of possible national security threats. More International News A Russian state media photo taken in Ulaanbaatar, Mongolia. Vyacheslav Prokofyev/Sputnik Vladimir Putin is visiting Mongolia in defiance of an International Criminal Court arrest warrant. The U.S. seized an airplane owned by Venezuela's leader, Nicolás Maduro. It was bought in violation of sanctions, the Justice Department said. Pope Francis traveled to Indonesia, where Muslim-Christian relations are strained and some Catholics face discrimination. Immigration An Ohio town is in the middle of the immigration debate. Employers were thrilled when Haitians filled open jobs. Then an immigrant driver was involved in a fatal school bus crash. Migrants in New York City shelters are struggling to get mail delivered. Important documents are getting lost or delayed. Other Big Stories In Rancho Palos Verdes, Calif.  Loren Elliott for The New York Times Landslides in the California town of Rancho Palos Verdes are swallowing multimillion dollar homes. Extreme heat and flooding from climate change are accelerating the deterioration of bridges, engineers say. OpenAI, the maker of ChatGPT, is struggling to become a profit-driven company and address concerns about the technology's safety. Opinions To beat Harris, Trump needs to run on his record instead of focusing on barbs, Senator Lindsey Graham writes. Harris needs to break from Biden on policy to win, James Carville argues. College students need to grow up and schools need to let them, Rita Koganzon writes. "I paid my kid $100 to read a book": Mireille Silcoff explains why. Listen to Ezra Klein talk about psychedelics and meaning on his show. Subscribe Today The Morning highlights a small portion of the journalism that The New York Times offers. To access all of it, become a subscriber with this introductory offer. MORNING READS Near Keene, N.Y. Anna Watts for The New York Times Beauty and danger: New York's swimming holes, tucked into forests and often unmarked on maps, offer relief during hot summers — but also pose risks. Colombia: Watch whales and greet them with stories, dancing and music. "Pinnacle Man": He was found frozen near the Appalachian Trail in Pennsylvania in 1977. His identity remained a mystery — until now. Lives Lived: Virginia Ogilvy served Queen Elizabeth II for nearly 50 years as the only American-born member of her inner circle of advisers and close friends known as the ladies-in-waiting. She died at 91. SPORTS College football: Florida State lost to Boston College. The 0-2 start for Florida State is a disappointing turn for a team many predicted to win its conference. M.L.B.: The New York Yankees slugger Juan Soto will become a free agent this offseason and could command a contract worth $560 million, our expert projects. U.S. Open: The No. 1 seeds Iga Swiatek and Jannik Sinner advanced yesterday, and four Americans — two men and two women — are into the quarterfinals. Read an update. N.F.L.: The San Francisco 49ers rookie Ricky Pearsall will miss at least the first four games of the season after he was shot during an attempted robbery last weekend, the team announced. ARTS AND IDEAS In Málaga, Spain. Jon Nazca/Reuters This summer, in popular European destinations, visitors became the targets of a tourism backlash. Some residents protested with hunger strikes against developments and took the streets in thousands; others sprayed tourists with water. Local officials threatened to cut off water to illegal vacation rentals. Read about how the anger played out in destinations like Amsterdam, Barcelona and Santorini. More on culture Gao Zhen, a Chinese artist who has drawn international acclaim for works critiquing the Cultural Revolution, has been detained in China, his brother and artistic partner said. Angelina Jolie and Brad Pitt, who are still in the middle of an acrimonious split, are both at this year's Venice Film Festival. They have been kept apart, The Washington Post reports. THE MORNING RECOMMENDS … Johnny Miller for The New York Times Pair pork tenderloin with a nutty tahini and citrus slaw. Care for your new tattoo. Pick the best time to get a flu shot. Pop a bottle of wine with a good corkscrew. Unwind in a comfy robe. GAMES Here is today's Spelling Bee. Yesterday's pangram was conjoined. And here are today's Mini Crossword, Wordle, Sudoku, Connections and Strands. Thanks for spending part of your morning with The Times. See you tomorrow. —German Sign up here to get this newsletter in your inbox. Reach our team at themorning@nytimes.com. Editor: David Leonhardt Deputy Editor: Adam B. Kushner News Editor: Tom Wright-Piersanti Associate Editor: Lauren Jackson News Staff: Desiree Ibekwe, Sean Kawasaki-Culligan, Brent Lewis, German Lopez, Ian Prasad Philbrick, Ashley Wu News Assistant: Lyna Bentahar Saturday Writer: Melissa Kirsch Need help? Review our newsletter help page or contact us for assistance. You received this email because you signed up for the Morning newsletter from The New York Times, or as part of your New York Times account. To stop receiving The Morning, unsubscribe. To opt out of other promotional emails from The Times, including those regarding The Athletic, manage your email settings. To opt out of updates and offers sent from The Athletic, submit a request. Subscribe to The TimesGet The New York Times app Connect with us on: Change Your EmailPrivacy PolicyContact UsCalifornia Notices The New York Times Company. 620 Eighth Avenue New York, NY 10018