Vice President Kamala Harris’s proposed tax plan could have significant negative impacts on the U.S. economy, according to recent studies by the Tax Foundation. The analysis suggests her policies could lead to substantial job losses, reduced economic growth, and lower wages.
In contrast, former President Trump’s economic proposals, while not without drawbacks, are projected to have less severe consequences. These findings highlight the potential economic ramifications of differing policy approaches as the country gears up for the next election cycle.
Key Facts:
- Harris’s tax plan could eliminate nearly 800,000 full-time equivalent jobs
- The plan could reduce long-run GDP by 2% and wages by 1.2%
- Trump’s proposals, including tariffs on China, could result in 387,000 job losses
- Harris proposes increasing the corporate tax rate from 21% to 28%
- Both candidates’ plans could significantly increase the federal deficit
The Rest of The Story:
The Tax Foundation’s study paints a concerning picture of the potential economic impact of Vice President Harris’s tax proposals. The analysis suggests that her plan to raise corporate and individual income tax rates to some of the highest levels in the developed world could slow economic growth and reduce U.S. competitiveness.
The study’s authors argue that the proposed tax credits and other carveouts would complicate the tax code and fail to address affordability challenges in housing and other sectors.
One of the most controversial aspects of Harris’s plan is a proposed tax on unrealized capital gains. This would effectively tax increases in asset values before they are sold, potentially discouraging investment in the stock market. Some economists worry this could lead to capital flight, similar to what occurred in France after the implementation of a wealth tax in 1989.
On the other hand, former President Trump’s economic plan includes extending the 2017 Tax Cuts and Jobs Act and potentially lowering the corporate tax rate further for some businesses.
However, his proposed tariffs on China and a universal tariff could offset much of the potential growth from these tax cuts. The Tax Foundation estimates that Trump’s full economic plan could increase the federal deficit by $1.3 trillion, while Harris’s proposals could increase deficits by $1.5 trillion to $2.6 trillion.
“We find the [Harris] tax policies would raise top tax rates on corporate and individual income to among the highest in the developed world, slowing economic growth and reducing competitiveness,” the Tax Foundation study’s authors, Erica York, Garret Watson, William McBride, and Alex Muresianu, wrote.
“The tax credits and other carveouts would complicate the tax code, run more spending through the IRS, and, together with various price controls, fail to improve affordability challenges in housing and other sectors,” they continued.
We find Harris’s tax plan would shrink the economy while redistributing a significant amount of income to the bottom 60 percent of taxpayers. pic.twitter.com/vkZtMw2DhO
— Erica York (@ericadyork) September 11, 2024
Commentary:
Vice President Harris’s economic policies appear to be a recipe for disaster. The projected loss of nearly 800,000 jobs and the potential for significant economic contraction should be alarming to all Americans.
If Harris truly had the ability to improve the economy, one must wonder why she hasn’t done so already as part of the current administration.
The Biden-Harris administration has presided over persistent inflation, rising living costs, and economic uncertainty. Their proposed solution of higher taxes and increased regulation seems poised to exacerbate these issues rather than solve them.
The potential for capital flight and reduced investment due to Harris’s unrealized capital gains tax is particularly concerning, as it could stifle innovation and economic growth for years to come.
The Bottom Line:
The Tax Foundation’s analysis of Vice President Harris’s and former President Trump’s economic proposals reveals stark differences in approach and potential outcomes.
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While both plans have their drawbacks, Harris’s proposals appear to pose a greater risk to job creation, economic growth, and U.S. competitiveness.
