From taxes and poverty reduction to housing, infrastructure and climate change, Donald Trump and Kamala Harris are at odds on the key economic issues that will affect New York.
No one knows if the winning candidate will be able to follow through on their promises. Implementing them will require action by Congress, which may wind up being controlled by the opposite political party.
In a two-part series, THE CITY is looking at the candidates’ proposals and how they would affect New York City. Today’s installment focuses on their approaches to taxes and fighting poverty. Later we’ll look at how the candidates seek to shape development and infrastructure.
Twiddling Tax Levers
As a high-tax state with an outsize share of high earners, New York has much to gain or lose when it comes to the federal tax code.
Consider the $10,000 cap on deducting state and local taxes on federal income tax filings, a key feature of the 2017 tax cut law that Trump claims as one of his most important accomplishments.
In his current campaign for president, Trump has promised he will restore unlimited state and local tax deductions, known in accounting lingo as “SALT.”
Harris has been silent on the SALT deduction, but it is set to expire in 2025, and Democrats have overwhelmingly opposed the cap.
The Democratic nominee has made it clear that she intends to raise their federal taxes on households that earn more than $400,000 — which would affect a number of New Yorkers.
Trump’s announcement last month that he would end the $10,000 cap came as one of the bigger surprises of the campaign. The timing may explain his change of position: it came just before he held a rally on Long Island, where both incomes and taxes are high and where Republicans are desperately trying to hold on to three of four congressional seats.
The SALT cap has been deeply unpopular in the city and its wealthy suburbs because many residents pay far more than $10,000 in state and local taxes.
Republicans imposed the cap in 2017 to reduce the cost of their tax cut bill. And restoring unlimited deductions would be costly, with the Penn Wharton Budget Model putting the cost at $1 trillion over 10 years.
Democrats opposed instituting the limit in 2017 and have been railing against it ever since, especially New York Democrat and Senate Majority Leader Chuck Schumer, who last month reiterated that ending it would be a top priority in the next Congress.
The election will affect taxes far beyond the fate of SALT because most of the 2017 tax cuts expire at the end of the next year, which could result in tax increases for two-thirds of Americans, according to the Tax Foundation.
Trump has said he not only wants to preserve the higher standard deduction and lower rates that were key features of the 2017 overhaul but to lower rates even further. He has suggested that he would make up for the lost revenue by raising tariffs on imports. And he vows to reduce the current 21% corporate tax rate.
Trump has also suggested eliminating taxes on Social Security benefits, which would benefit higher income Americans because those living only on Social Security already pay no income taxes. Those taxpayers already benefit from the fact that some of their benefits are excluded from their gross income.
He has also proposed eliminating taxes on tips, which economists warn could completely disrupt federal finances as Americans reconfigure how they are paid in order to escape income taxes. Harris also endorsed eliminating taxes on tips, in large part in hopes of swaying the many hospitality workers in the swing state of Nevada.
Harris meanwhile has unveiled a tax plan that would raise taxes on high earners and corporations, which would have a major impact in New York. Following the tax plan laid out by President Joe Biden, she would preserve the tax cuts for people making less than $400,000 but the top tax rate would climb to 44.6% from 29.6% on regular income. Corporations would see their rate increase to 28% from 21%.
In a departure from Biden and in a move to signal she was somewhat more sympathetic to business interests, Harris said she would tax capital gains — the profits from selling assets like stocks or real estate — at 28%. Biden has sought a 39.8% levy. Both would be higher than the current rate of 23.8%.
Pushing Back on Poverty
Both candidates also proffer policies advertised as helping people far lower down the income ladder.
Harris is looking to expand access and benefits to a popular child tax credit.
The 2017 Trump tax bill doubled the child tax credit to $2,000 but by making it a deduction from taxes owed, it denied the full benefit to the poorest quarter of children because their parents earn too little to owe income tax.
The Biden pandemic relief bill of 2021 increased the credit to $3,600 for children ages 6 and under and $3,000 for older kids, regardless of whether the parents had income or not. That expanded tax credit temporarily reduced child poverty in the city by one-third to a record low of 15%, according to the anti-poverty group Robin Hood.
But it expired in early 2023 when Republicans led by Florida Sen. Marco Rubio blocked its extension, arguing it should only go to those who are working. Harris wants to restore the pandemic tax break and add a $6,000 payment for infants.
Republican vice presidential candidate J.D. Vance suggested boosting the child tax credit to $5,000 but wants it to go to all families, which would increase its cost dramatically. He has said Trump supported the idea, but Trump has not said so himself.
Since regaining control of the House in 2023, Republicans have been trying to impose work rules and other restrictions on programs like Medicaid and food stamps and Trump has been hostile to those benefits as well.
Democrats have opposed Republican efforts on work rules and reductions on those programs.
