Vice President Kamala Harris’s tax plan would effectively vaporize nearly 800,000 full-time equivalent jobs, according to studies published by the Tax Foundation Tuesday.
Harris’ proposals, including hiking corporate taxes to be among the highest in the developed world, would lower employment by roughly 786,000 full-time equivalent jobs, and reduce long-run gross domestic product (GDP) and wages by 2% and 1.2% respectively, the Tax Foundation found. Meanwhile, Trump’s proposals, including a 60% tariff on China, would lower employment by approximately 387,000 full-time equivalent jobs, lower long-run GDP by 0.2% and increase long-run wages by 0.6%.
“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, William McBride, Erica York, Garret Watson 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.”
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
Harris has proposed to increase the corporate tax rate from 21% to 28%, which would make far more business initiatives unprofitable after-tax and not worth undertaking, thereby stymying economic growth, according to the Tax Foundation.
She also proposed a tax on unrealized capital gains that would tax increases in the value of assets before they are even sold, which would essentially tax Americans for investing in the stock market instead of spending their money, according to the Cato Institute. Capital investment is a key driver of economic growth as it allows businesses to perform research and development and ultimately bring new innovative products and services to the market, according to Investopedia.
Harris’ tax on unrealized gains could also cause Americans to move their assets abroad in order to avoid the additional tax burden. A 1989 French wealth tax on assets worth more than €800,000 caused €200 billion worth of capital flight and 40,000 millionaires to leave the country between 1989 and 2007, according to French economist Eric Pichet.
Trump, on the other hand, would seek to extend the 2017 Tax Cuts and Jobs Act which lowered the corporate tax rate from 35% to 21%, and has even proposed implementing a 15% rate for some businesses, according to the Tax Foundation. However, the former president’s proposal to increase tariffs on China to 60% and impose a 10% universal tariff would cancel out much of this growth, according to the study.
Trump’s economic plan, including the full suite of tariffs and a repeal of the 2022 Inflation Reduction Act, could increase the federal deficit by $1.3 trillion, while the net effect of Harris’s proposals could increase deficits by anywhere between $1.5 trillion and $2.6 trillion, the Tax Foundation found. The federal debt sat at roughly $35.35 trillion on Monday, according to the U.S. Treasury.
“The wide range of possibilities reflects considerable uncertainty about her fiscal policy stance at this point, leaving a large void regarding how she might deal with the already unprecedented, dangerous, and unsustainable federal debt trajectory,” the Tax Foundation study’s authors wrote.
The Harris campaign did not immediately respond to a request for comment.
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