The budgetary proposals introduced by Vice President Kamala Harris would raise the tax revenue received by the federal government while increasing unemployment and slowing economic growth, according to an analysis released earlier this month by the Tax Foundation.
The nonpartisan tax policy nonprofit observed that the Democratic nominee continues many of the policies favored by President Joe Biden, especially with respect to increased taxes “aimed at businesses and high earners,” while expanding benefits such as the child tax credit. The plan would raise taxes collected by the federal government by $4.1 trillion between 2025 and 2034.
“We find the 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 analysis said. “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.”
The tax policies would also cause a 2% decrease in long-run gross domestic product, a measure of economic output based on the value of goods and services produced, as well as a 3% decrease in the capital stock, or the resources used to produce new goods and services.
Harris has proposed increasing the top individual income tax rate from 37% to 39.6% on income above $400,000 for single filers, as well as increasing the corporate tax rate from 21% to 28%.
Key provisions of the Tax Cuts and Jobs Act, the landmark legislation passed by former President Donald Trump seven years ago, are slated to expire next year. Tax Foundation analysts noted that Harris “has not clearly indicated if or how her spending priorities align” with the law, adding that she could merely extend the provisions for all except wealthy taxpayers.
Harris has also floated a variety of healthcare and education initiatives, such as spending on childcare and long-term care, which would presumably “reduce net revenue collection further.”
Harris only unveiled her campaign platform after weeks of criticism from Republicans asserting that she has not clearly communicated with voters. The economic section of her platform also includes vows to enact a ban on price gouging and to advance new climate change actions.
