Trump and Harris’s Economic Policies

 In anticipation of the upcoming 2024 presidential election, there has been a pervasive pessimism about the American economy expressed by many voters. Both former President Donald Trump and Vice President Kamala Harris acknowledge the necessity of making economic change, but they plan to go about this change in highly different ways. This article summarizes the economic approaches that both presidential candidates plan to take to tackle the economy.

Donald Trump

The former president takes a more laissez-faire approach to the US economy. His economic platform mainly focuses on shifting production domestically through tariffs, reducing tax rates for Americans, and reducing regulations for manufacturers. He aims to reduce inflation, lower prices, and promote economic growth. He has laid out several major plans to accomplish these goals.

Tariffs on Foreign Goods

Trump aims to encourage U.S.-based production and set up factories on U.S. soil instead of outsourcing production to foreign countries. He plans to do this primarily by raising and imposing new tariffs on foreign goods and manufacturers such as those from China. These tariffs will have effects on consumer prices and activities—for example, there will be a lesser variety of imported goods because foreign producers may not want to pay the tariffs, and prices may increase because producers will need to pay more to export their goods, causing them to pass this extra cost onto consumers in order to minimize losses.

Energy Independence

Trump hopes to achieve energy independence by increasing the extraction of oil and funding new power plants, nuclear reactors, and oil refineries to utilize America’s oil and natural gas reserves. He also wants to terminate certain environmental mandates which he believes will harm the American economy—such as the electric vehicle mandate, which aims to make 67% of light-duty vehicles electric by 2032—in an effort to make America less dependent on foreign powers for energy. For example, electrical vehicle production relies heavily on foreign imports such as earth metals mined in Africa and semiconductors from Asia.

Permanent Trump Tax Cuts

Trump promises to continue his 2016 tax cuts. He plans to get rid of taxes on funds such as tips for service workers and social security benefits. Most importantly, he envisions a reduction in the corporate tax rate from 21% to 15% for American manufacturers under his administration. In the end, he pledges to save American taxpayers over $1 trillion in total—mostly cutting tax breaks for the rich and the upper middle class. However, these tax breaks will decrease the federal budget, and many experts say that income that tariffs bring in will not be able to replace it.

Audit of the Federal Government

Trump has described a huge financial audit that he would carry out on the federal government if elected and says that he will “reform” the government—which he concurrently believes is corrupt and not using its budget properly—and how it spends its budget.

Kamala Harris    

The vice president desires that the government take the role of investing directly into the growth of American manufacturing and regulating the behavior of corporations for the benefit of the consumer. Her economic platform is mostly focused on stopping corporate price hikes in the hopes of solving the cost of living crisis. She intends to increase taxes on corporations and the wealthy. Harris is also pro small business—she plans to implement small business tax deductions and enact more federal contracts for small businesses. In a similar vein, she also wants to restore and expand the child tax credit and provide an extra tax credit for low to middle income earners. Finally, Harris plans to pursue policies to decrease the price of drugs, especially generics using either price caps or allowing Medicare to negotiate for more prices.

Increasing Production At Home

              Through targeted tax credits/deductions for companies that manufacture their products inside America and a new $100 billion investment plan, Harris intends to rapidly increase the manufacturing capacity of the nation. She intends to pay for this agenda with the aforementioned tax hikes. 

Harris’s Tax Hikes On The Wealthy

               Since his 2020 campaign, President Joe Biden has promised not to hike taxes on Americans that make below a $400,000 annual income. Harris has continued to use this number despite the fact that inflation has made this a significantly smaller number then it was in 2020, though it is still certainly a fairly high income. She does plan to increase the tax bracket of the top one percent of earners from 37% to 39.6% in the hope to raise revenue for her new programs. 

Tax Credits

             In an effort to promote economic mobility Harris wants to provide a $3,000 tax credit for individuals making less than $50,000 a year and a $6,000 tax credit for couples making less than $100,000 a year. Harris also wants to restore the $3,600 child tax credit that was in effect during the pandemic and add a new $6,000 tax credit for infants one year or younger. While this would significantly decrease government revenues, the hope is that other taxes would make up for it and it could raise millions of children out of poverty.

Tax On Unrealized Capital Gains

              The wealthiest Americans keep the majority of their net worth in assets like stocks that are expected to grow consistently every year. Harris wants to tax asset growth exceeding $100 million at a 25% minimum rate. This plan has failed to gain congressional support generally and is considered extremely difficult to practically enforce or administer. If implemented successfully, despite these concerns, it could theoretically raise an enormous amount of money. 

Corporate Tax Rate Increase

               In order to raise hundreds of billions of dollars over the course of the next decade, Harris wants to partially reverse Trump’s 2017 tax rate slash—35% to 21%—by increasing the corporate tax rate back to 28%. This is a significant cutback from her failed presidential primary run in 2020 when she wanted to increase it to 35%.

Drug Price Reductions

            Harris pledges to preserve a maximum price of $35 per month for insulin and the limit of $2,000 a year in out-of-pocket drug costs for Medicare patients that were established under Biden. She also wants to use savings from price negotiations to pay for a proposal to cover long term care at home for people on Medicare. Providing Medicare for all has been vaguely mentioned as well but seems unlikely in the current political climate.

Pro Small Business Policies

            In order to provide small businesses more flexibility and cash on hand, Harris wants to increase the federal tax deduction for startup expenses from $5,000 to $50,000. She has also pledged that in her first term, one third of federal contract funds will go to small businesses to provide them with more opportunities to obtain contracts.