A look at the presidential election's key economic and retirement issues

Vice President Kamala Harris and former President Donald Trump are campaigning on vastly different plans in an election that’s widely expected to be decided by ultra-slim majorities in a few key states.

Their differences range from foreign policy to immigration to reproductive rights, but Trump and Harris also diverge on tax policy and the economy, and regulatory issues concerning retirement plans and investors broadly, sources said.

Here’s a look at some key policy areas ahead of the Nov. 5 election:

Regardless of who’s in the White House come January, tax policy will be a major discussion point in Washington next year as many of the provisions in the Republican’s 2017 Tax Cut and Jobs Act expire in 2025.

Trump, who signed the 2017 bill into law, called for extending the bill’s expiring provisions, which mostly affect individuals, such as increases in both the standard deduction and the child tax credit.

Harris, like President Joe Biden, has vowed not to raise taxes on Americans who make under $400,000 annually (about 98% of taxpayers according to the nonpartisan Tax Foundation), but has called for raising taxes on corporations and wealthy Americans.

The vice president supports a billionaire’s minimum tax, but her campaign declined to say if she supports the specific parameters of the minimum tax on billionaires included in Biden’s annual budget request to Congress, which would apply a 25% minimum levy to income of those with at least $100 million in assets, according to Bloomberg.

On capital gains, Harris has called for raising the tax rate to 28% from 20% for households making over $1 million a year, which is less than the 39.6% that Biden has endorsed. She has also proposed increasing the stock buyback tax to 4% from 1% and raising the corporate tax rate to 28% from 21%.

Trump on the other hand, has no plans to raise tax rates on capital gains or stock buybacks and said he would further cut the corporate tax rate to 15%. In the 2017 tax bill, Republicans cut the corporate rate to 21% from 35%.

Trump has suggested establishing a universal baseline tariff on all U.S. imports of 10% to 20% and a 60% tariff on all U.S. imports from China, according to the Tax Foundation.

In recent weeks, he’s also floated replacing the federal income tax with proceeds from tariffs, though hasn’t provided specifics.

And in September, Trump backed the creation of a U.S. sovereign wealth fund to pay for infrastructure projects and reduce the national debt that would be backed by tariffs.

Some experts, including at the Tax Foundation, worry the proposed tariffs would raise taxes on U.S. imports, increase inflation and burden consumers and unprotected industries with higher taxes and lower incomes.

Both Harris and Trump have vowed to protect Social Security, but neither has released a detailed plan for the program’s future. The Social Security trust fund for retirees and their families faces a depletion deadline of 2033, at which point the fund's income could only pay 79% of its scheduled benefits, according to the Social Security Board of Trustees’ annual report released in May.

Trump, of note, has floated eliminating taxation of Social Security benefits.

But an analysis from the Committee for a Responsible Budget found that policies such as that and expanded deportations would widen Social Security’s funding deficits and advance the trust fund’s insolvency by three years.

On the regulatory front, sources largely expect a Harris administration’s Department of Labor to continue the work of the Biden administration, defending key rules in court and implementing provisions from SECURE 2.0, a retirement security bill Congress passed in 2022.

A second Trump administration, however, would bring major changes to the department’s Employee Benefits Security Administration, sources said.

Notably, the biggest Harris-Trump difference involving the Employee Retirement Income Security Act involves environmental social and governance investing. But while the debate around ESG is fierce, the election outcome will impact much more than that, according to Bradford P. Campbell, a partner at law firm Faegre Drinker Biddle & Reath and former assistant secretary of labor for EBSA during President George W. Bush's administration.

“While ESG is the flashpoint … the regulation itself is bigger,” Campbell said. “It’s actually the regulation that governs how ERISA fiduciaries make investment decisions. So it’s not just, ‘Do we pick ESG and if so, how?’ It’s actually, ‘What is the test for making investment decisions?’”

In 2022, the Labor Department finalized a rule permitting ERISA fiduciaries to consider ESG factors when making investment decisions. The rule also maintains the department's position that fiduciaries may not sacrifice investment returns or assume greater investment risks as a means of promoting collateral social policy goals.

The rule came after two rules promulgated late in the Trump administration that said retirement plan fiduciaries could not invest in "non-pecuniary" vehicles that sacrifice investment returns or take on additional risk and outlined a process a fiduciary must undertake when making decisions about casting a proxy vote.

“While ESG was the motivating factor, that test actually changed how every investment decision is made regardless of whether it has ESG,” Campbell said of the Trump administration rule. “I don’t think the Trump folks ever appreciated how much dislocation and litigation risk that kind of change creates.”

If Trump were to win a second term, one of the first things his administration will try to do is “repeal the current investment factors regulation that the Biden administration put in place and return to the Trump administration’s 2020 regulation,” Campbell predicted.

The Biden administration rule is currently being challenged in court by Republican attorneys general.

Another major topic at the Labor Department is its new fiduciary investment advice rule. The Retirement Security Rule, finalized in April, among other things, changed the five-part test that determines when someone is an investment advice fiduciary under ERISA so that one-time advice, such as rollovers to IRAs or annuity purchases, must be in an investor’s best interest.

Amid lawsuits, two district court judges have halted the rule's implementation and who wins the election could determine how robust the government’s defense is.

A 2016 Obama-era rule that broadened the definition of a person or entity taking on fiduciary responsibilities was struck down in 2018 by a three-judge panel at the 5th U.S. Circuit Court of Appeals in New Orleans.

The Trump administration, which took office in January 2017, allowed the Justice Department to defend the rule before the 5th Circuit in July 2017 oral arguments, but after the panel ruled against the Labor Department the following year, the administration elected not to appeal the decision and the fiduciary rule died.

A similar story could play out if Trump wins, sources said.

The Securities and Exchange Commission under Chair Gary Gensler has been busy over the last three-plus years, finalizing dozens of complex rules affecting all aspects of the investing landscape.

Gensler’s term expires in 2026, but Trump has pledged to fire him, and Harris would have to weigh keeping him on or seeking a new SEC chair, sources said.

Either way, the next SEC chair is more likely to slow the pace of rule-making and focus on high priority issues, like the custody framework for SEC-registered investment advisers, according to Igor Rozenblit, managing partner at Iron Road Partners and former SEC staffer.

Under Gensler, the SEC in 2023 proposed overhauling the custody framework, but the industry pushback was fierce, and the agency didn’t move forward.

“I would expect a little more discretion about what moves forward and what doesn’t,” Rozenblit said of the next SEC chair.

A Harris administration would mean a continued focus for enforcement and exams on the private markets space, but a Trump administration likely wouldn’t, said Rozenblit, who founded and co-led the SEC examinations division’s private fund unit before establishing regulatory and compliance consulting firm Iron Road Partners in 2021.

In a client alert published in October, Iron Road said Republican administrations often view private fund investors as “large, sophisticated institutions capable of protecting their own interests. As a result, they may shift (the examinations division’s) focus away from private funds and towards retail products.”

Congress in recent years has passed two major bipartisan retirement security bills and talks are underway for a third installment known as SECURE 3.0, sources said.

Democrats today narrowly control the Senate while Republicans hold a slim majority in the House. Control of both chambers could flip in the upcoming election, but the majorities either way are expected to remain small.

Either way, SECURE 3.0 will be a discussion topic for lawmakers and their staffs. The package will likely focus on lifetime income solutions and increasing retirement plan portability, said Melissa Kahn, managing director of retirement policy for State Street Global Advisors' defined contribution team.

While both parties are interested in a SECURE 3.0 bill, Kahn said if Democrats were to sweep control of the White House, House and Senate, the package would likely be more of a priority since Rep. Richard Neal, D-Mass., would once again lead the tax writing House Ways & Means Committee.

Neal, who has made retirement security one of his main issues, reintroduced a bill in February to require businesses with 10 or more employees that don't offer a retirement plan to automatically enroll their workers in IRAs or 401(k)-type.

That bill does not have any Republican support, but could be in play if Democrats sweep control, Kahn noted.

Added Campbell, “SECURE 3.0, while there is work going on I think in the same (bipartisan) spirit at this point, the election could theoretically change how much that’s a bipartisan exercise going forward if one party gets everything.”

Moreover, if Republicans win the White House, Senate and House, the provisions in the 2017 Tax Cut and Jobs Act that are set to expire in 2025 will almost certainly be extended, sources said.

On the legislative front, Republican lawmakers will also pass bills aimed at thwarting ESG investing.

“If we have unified government under Republicans, this ESG issue is likely to be a legislative as well as a regulatory issue to consider,” Campbell said.