Advertisement

Opinion: Where both presidential candidates’ tax promises go wrong

Kamala Harris on stage in front of a sign about the child tax credit and the earned income tax credit
Vice President Kamala Harris wants to dramatically expand the child tax credit, especially for the first baby.
(Kent Nishimura / Los Angeles Times)
Share via

Voters are understandably perplexed by Kamala Harris’ economic agenda, on which her campaign has offered little substance and little more than a string of vague promises. But when you follow the policy breadcrumbs, the vice president’s intentions become clear: She plans a continuation of the same economic policies we’ve seen over the last four years.

The weirdest thing is how similar many of her proposals are to those of Donald Trump.

Excluding gratuities from federal income taxes would be bad news for customers — and perhaps even for tipped workers themselves.

The Harris-Walz campaign policy booklet is light on substance but rich in tax credits for small businesses, first-time homeowners, and other selected industries. Harris wants to dramatically expand the child tax credit, especially for the first baby. She also wants more credits for housing developers and Obamacare customers.

Her campaign is copying the Biden-Harris administration’s playbook of granting large tax credits and deductions to many special interests. Legislation under the current administration unleashed what could cost $1.8 trillion over 10 years in energy subsidies alone. Meanwhile, the CHIPS Act extended additional tax credits to huge semiconductor companies, including Intel. Tax subsidies in 2021 amounted to $1.2 trillion, which shows how much previous administrations also liked handing out tax subsidies. But the Biden-Harris administration certainly expanded them dramatically; they now stand at $2 trillion.

Advertisement

Kamala Harris calls Trump’s tariffs a ‘national sales tax.’ She’s right. His snake-oil economic plans would transfer trillions from the poor and middle class to the rich.

Former President Trump also wants to hand out new tax credits and deductions left and right. He wants to cut income tax on tips (Harris embraces this too), tax credits for family caregivers and an extended child tax credit, and homeownership incentives, according to his campaign platform. He also wants to add tax credits for domestic manufacturing in ways that closely resembles the CHIPS Act, which some Republicans supported. Trump has also promised to exempt Social Security benefits from taxes and overtime pay.

While tax credits might sound good to voters who could benefit from them, they are a bad deal for taxpayers and the economy. They usually don’t grow the economy, because they often don’t encourage work, savings or investment. When they do encourage those things, tax credits can subtract from growth by directing capital and effort toward activities picked by the government for political reasons, rather than those picked by investors and consumers for sound economic reasons.

Tax credits are also quite wasteful, as many reward activities that already happened or were going to happen with or without the incentive. Most projects that received the Inflation Reduction Act tax credits were announced well before the credits were created.

Advertisement

In the worst-case scenario, tax credits create disincentives to work. Take both candidates’ extended child tax credit. Harris would like $6,000 for the first baby and $3,600 for subsequent kids. Trump’s running mate, JD Vance, has floated the idea of a $5,000 per kid credit. (Neither has a plan to pay for it.) The credit would sit atop some 80 existing welfare programs — many already targeting families — and would dispense with work requirements. Parents who don’t make enough money to pay federal income taxes would receive some cash from the government.

Research by economist Kevin Corinth shows that “families with little or no earnings are already eligible for tens of thousands of dollars in government benefits.” Adding more cash may be seen as helpful, but disincentivizing work leads to negative outcomes for families with children at the highest risk of being— and remaining — in poverty. Economists have shown that parental work, not government welfare, is the best way out of poverty.

Harris’ $25,000 tax credit for first-time homeowners would also increase prices. There is widespread agreement that high housing prices largely result from restrictions on housing supply caused by too many rules and regulations. Without dramatic changes to city, state and county regulations, this federal subsidy would further jack up the price of housing by boosting demand while doing nothing to increase ordinary Americans’ access to housing. The same would be true with Trump’s proposal. (According to the Republican platform, if reelected, Trump wants to “promote homeownership through Tax Incentives and support for first-time buyers.”)

Advertisement

As for tax credits directed toward corporations, you’ve perhaps heard a different name: corporate welfare. Study after study finds that a vast majority of these credits go to a relative few large and well-connected companies. For a recent example, the Philanthropy Roundtable’s Jack Salmon looked at the tax credits extended and the expanded spending under the Inflation Reduction Act and found that three-quarters of benefits went to 15 large corporations.

Basically, Harris wants more of the same unfair, unproductive tax handouts. And Trump seems to agree with that plan. Worse yet, neither of them have a plan to pay for these handouts. This is incredibly irresponsible when we already have a $2-trillion deficit that would rise to $4 trillion within 10 years under current policies.

The other troubling approach is Harris’ support for policing pricing practices at grocery stores. America’s economy is resilient when prices are determined by a push and pull between producers and consumers.

Food prices have increased dramatically in the last four years, but not because of price gouging or corporate greed. Instead, this highest inflation in four decades was brought on by the federal government’s decision to flood the economy with spending and stimulus and the Biden administration’s refusal to scale back as the COVID-19 pandemic waned. Artificially low prices will lead to empty shelves and quality deterioration.

Harris also wants to cap banking and credit card late fees as part of a larger effort to eliminate misleadingly labeled “junk fees.” This might sound good, but once the government forces companies to lower fees, delayed payments will increase, making lending money riskier. When that happens, the only tools left for credit card companies to manage risk will be higher interest rates — which means higher costs even for responsible borrowers — or outright denials of credit cards to low-income households.

Trump too favors price control, as he now wants to cap credit card interest rates at 10%.

Advertisement

There are other similarities. Harris hasn’t made imposing tariffs the center of her campaign as Trump has, but the Biden-Harris administration has kept much of Trump’s tariffs and has added others to the mix.

One area where they sound different is taxes. While Trump wants to extend the tax provisions of his 2017 tax cuts that are expiring at the end of 2025 as well as cut the corporate income tax further, Harris is embracing the Democratic talking point of making rich people pay “their fair share” and not hiking taxes for those making less than $400,000. However, the plan she lays out will inflict harm on ordinary workers and consumers. Take her plan to increase the corporate income tax rate to 28%. Studies show that the bulk will be shouldered not by corporations, but by their workers in the form of lower wages and by consumers in the form of higher prices. Such a tax hike could well slow economic growth, which hurts lower-income people the most.

And many of the tax credits Harris proposes (or supported during the Biden years) are likely to benefit richer taxpayers. The extended child tax credit isn’t targeted at low-income families; most of the benefit will go to families earning higher incomes. Electric vehicle tax credits have always mostly gone to taxpayers with incomes above $100,000. That will continue. And while the skinny policy book lacks detail, I’ll wager that Harris will support ending the cap on the state and local tax deduction — a tax break that chiefly benefits high-income taxpayers in high-tax states. Trump has already indicated that he would eliminate the cap.

In the end, Harris’ economic plan is a familiar, ineffective formula of tax credits, corporate welfare and government intervention all over the place. Unfortunately, Trump is offering much of the same.

Veronique de Rugy is a senior research fellow at the Mercatus Center at George Mason University.

Advertisement
seductrice.net
universo-virtual.com
buytrendz.net
thisforall.net
benchpressgains.com
qthzb.com
mindhunter9.com
dwjqp1.com
secure-signup.net
ahaayy.com
tressesindia.com
puresybian.com
krpano-chs.com
cre8workshop.com
hdkino.org
peixun021.com
qz786.com
utahperformingartscenter.org
worldqrmconference.com
shangyuwh.com
eejssdfsdfdfjsd.com
playminecraftfreeonline.com
trekvietnamtour.com
your-business-articles.com
essaywritingservice10.com
hindusamaaj.com
joggingvideo.com
wandercoups.com
wormblaster.net
tongchengchuyange0004.com
internetknowing.com
breachurch.com
peachesnginburlesque.com
dataarchitectoo.com
clientfunnelformula.com
30pps.com
cherylroll.com
ks2252.com
prowp.net
webmanicura.com
sofietsshotel.com
facetorch.com
nylawyerreview.com
apapromotions.com
shareparelli.com
goeaglepointe.com
thegreenmanpubphuket.com
karotorossian.com
publicsensor.com
taiwandefence.com
epcsur.com
southstills.com
tvtv98.com
thewellington-hotel.com
bccaipiao.com
colectoresindustrialesgs.com
shenanddcg.com
capriartfilmfestival.com
replicabreitlingsale.com
thaiamarinnewtoncorner.com
gkmcww.com
mbnkbj.com
andrewbrennandesign.com
cod54.com
luobinzhang.com
faithfirst.net
zjyc28.com
tongchengjinyeyouyue0004.com
nhuan6.com
kftz5k.com
oldgardensflowers.com
lightupthefloor.com
bahamamamas-stjohns.com
ly2818.com
905onthebay.com
fonemenu.com
notanothermovie.com
ukrainehighclassescort.com
meincmagazine.com
av-5858.com
yallerdawg.com
donkeythemovie.com
corporatehospitalitygroup.com
boboyy88.com
miteinander-lernen.com
dannayconsulting.com
officialtomsshoesoutletstore.com
forsale-amoxil-amoxicillin.net
generictadalafil-canada.net
guitarlessonseastlondon.com
lesliesrestaurants.com
mattyno9.com
nri-homeloans.com
rtgvisas-qatar.com
salbutamolventolinonline.net
sportsinjuries.info
wedsna.com
rgkntk.com
bkkmarketplace.com
zxqcwx.com
breakupprogram.com
boxcardc.com
unblockyoutubeindonesia.com
fabulousbookmark.com
beat-the.com
guatemala-sailfishing-vacations-charters.com
magie-marketing.com
kingstonliteracy.com
guitaraffinity.com
eurelookinggoodapparel.com
howtolosecheekfat.net
marioncma.org
oliviadavismusic.com
shantelcampbellrealestate.com
shopleborn13.com
topindiafree.com
v-visitors.net
djjky.com
053hh.com
originbluei.com
baucishotel.com
33kkn.com
intrinsiqresearch.com
mariaescort-kiev.com
mymaguk.com
sponsored4u.com
crimsonclass.com
bataillenavale.com
searchtile.com
ze-stribrnych-struh.com
zenithalhype.com
modalpkv.com
bouisset-lafforgue.com
useupload.com
37r.net
autoankauf-muenster.com
bantinbongda.net
bilgius.com
brabustermagazine.com
indigrow.org
miicrosofts.net
mysmiletravel.com
selinasims.com
spellcubesapp.com
usa-faction.com
hypoallergenicdogsnames.com
dailyupdatez.com
foodphotographyreviews.com
cricutcom-setup.com
chprowebdesign.com
katyrealty-kanepa.com
tasramar.com
bilgipinari.org
four-am.com
indiarepublicday.com
inquick-enbooks.com
iracmpi.com
kakaschoenen.com
lsm99flash.com
nana1255.com
ngen-niagara.com
technwzs.com
virtualonlinecasino1345.com
wallpapertop.net
casino-natali.com
iprofit-internet.com
denochemexicana.com
eventhalfkg.com
medcon-taiwan.com
life-himawari.com
myriamshomes.com
nightmarevue.com
healthandfitnesslives.com
androidnews-jp.com
allstarsru.com
bestofthebuckeyestate.com
bestofthefirststate.com
bestwireless7.com
britsmile.com
declarationintermittent.com
findhereall.com
jingyou888.com
lsm99deal.com
lsm99galaxy.com
moozatech.com
nuagh.com
patliyo.com
philomenamagikz.net
rckouba.net
saturnunipessoallda.com
tallahasseefrolics.com
thematurehardcore.net
totalenvironment-inthatquietearth.com
velislavakaymakanova.com
vermontenergetic.com
kakakpintar.com
begorgeouslady.com
1800birks4u.com
2wheelstogo.com
6strip4you.com
bigdata-world.net
emailandco.net
gacapal.com
jharpost.com
krishnaastro.com
lsm99credit.com
mascalzonicampani.com
sitemapxml.org
thecityslums.net
topagh.com
flairnetwebdesign.com
rajasthancarservices.com
bangkaeair.com
beneventocoupon.com
noternet.org
oqtive.com
smilebrightrx.com
decollage-etiquette.com
1millionbestdownloads.com
7658.info
bidbass.com
devlopworldtech.com
digitalmarketingrajkot.com
fluginfo.net
naqlafshk.com
passion-decouverte.com
playsirius.com
spacceleratorintl.com
stikyballs.com
top10way.com
yokidsyogurt.com
zszyhl.com
16firthcrescent.com
abogadolaboralistamd.com
apk2wap.com
aromacremeria.com
banparacard.com
bosmanraws.com
businessproviderblog.com
caltonosa.com
calvaryrevivalchurch.org
chastenedsoulwithabrokenheart.com
cheminotsgardcevennes.com
cooksspot.com
cqxzpt.com
deesywig.com
deltacartoonmaps.com
despixelsetdeshommes.com
duocoracaobrasileiro.com
fareshopbd.com
goodpainspills.com
hemendekor.com
kobisitecdn.com
makaigoods.com
mgs1454.com
piccadillyresidences.com
radiolaondafresca.com
rubendorf.com
searchengineimprov.com
sellmyhrvahome.com
shugahouseessentials.com
sonihullquad.com
subtractkilos.com
valeriekelmansky.com
vipasdigitalmarketing.com
voolivrerj.com
zeelonggroup.com
1015southrockhill.com
10x10b.com
111-online-casinos.com
191cb.com
3665arpentunitd.com
aitesonics.com
bag-shokunin.com
brightotech.com
communication-digitale-services.com
covoakland.org
dariaprimapack.com
freefortniteaccountss.com
gatebizglobal.com
global1entertainmentnews.com
greatytene.com
hiroshiwakita.com
iktodaypk.com
jahatsakong.com
meadowbrookgolfgroup.com
newsbharati.net
platinumstudiosdesign.com
slotxogamesplay.com
strikestaruk.com
trucosdefortnite.com
ufabetrune.com
weddedtowhitmore.com
12940brycecanyonunitb.com
1311dietrichoaks.com
2monarchtraceunit303.com
601legendhill.com
850elaine.com
adieusolasomade.com
andora-ke.com
bestslotxogames.com
cannagomcallen.com
endlesslyhot.com
iestpjva.com
ouqprint.com
pwmaplefest.com
qtylmr.com
rb88betting.com
buscadogues.com
1007macfm.com
born-wild.com
growthinvests.com
promocode-casino.com
proyectogalgoargentina.com
wbthompson-art.com
whitemountainwheels.com
7thavehvl.com
developmethis.com
funkydogbowties.com
travelodgegrandjunction.com
gao-town.com
globalmarketsuite.com
blogshippo.com
hdbka.com
proboards67.com
outletonline-michaelkors.com
kalkis-research.com
thuthuatit.net
buckcash.com
hollistercanada.com
docterror.com
asadart.com
vmayke.org
erwincomputers.com
dirimart.org
okkii.com
loteriasdecehegin.com
mountanalog.com
healingtaobritain.com
ttxmonitor.com
nwordpress.com
11bolabonanza.com