As the 2024 presidential campaign heats up, Vice President Kamala Harris and former President Donald Trump have laid out competing economic visions for the country.
The presidential candidates are going head to head on a number of tax policy issues, including the expansion of a child tax credit and the elimination of taxes on tips.
Both candidates’ spending plans could ultimately add to the already massive national deficit and weigh on US economic growth, according to new findings from the Penn Wharton Budget Model, a nonpartisan group at the University of Pennsylvania’s Wharton School.
“You’re naturally going to have a negative impact on the economy,” Kent Smetters, a University of Pennsylvania Wharton School professor and faculty director of the Penn Wharton Budget Model, told Fox Business. “That doesn’t mean that it’s a bad policy. It just means that that is one of the trade-offs.”
Kamala Harris
Harris’ plan would add about $1.2 trillion to the deficit and trim GDP — the broadest measure of goods and services produced in a nation — by about 1.3% over the next decade.
By 2054, the tax and spending plan would cut economic growth by roughly 3%, according to the proposal.
“We are on a fiscal path right now that is really dire,” Smetters said. “And neither candidate is really calibrated on that. Neither of them wants to talk about the spendage.”
Harris, the Democratic nominee, has proposed providing a $6,000 tax credit for parents of newborns. Families would receive the payment during their child’s first year.
She has also pitched bringing back the pandemic-era expanded child tax credit.
The boosted payout, authorized by President Biden, offered an annual payment of $3,000 for every child age 6 to 17 and $3,600 for every child under age 6 in 2021. Individuals earning less than $75,000 and married couples jointly making less than $150,000 were eligible for the boosted credit.
To pay for the proposal, Harris has called for raising the corporate tax rate from 21% to 28%.
Donald Trump
Trump’s spending plan could increase the national deficit by $4.1 trillion over the next decade, according to the proposal. While it would initially boost the nation’s GDP, it would eventually drag on economic growth.
The plan would shrink GDP by 0.4% by 2034, and 2.1% by 2054.
Trump has endorsed several tax-related policies, including making the entirety of the Tax Cuts and Jobs Act permanent if he is re-elected in November.
Enacted in 2017 by Republican lawmakers and Trump, the law drastically overhauled the nation’s tax code, including reducing the top individual income tax bracket to 37% from 39.6% and nearly doubling the size of the standard deduction.
However, those changes to the individual section of the tax code are poised to sunset in 2025, meaning that many taxpayers — including those who earn less than $400,000 — will face steeper levies if the law is not extended.
More than $3.4 trillion in individual income and estate tax cuts are set to expire next year if Congress does not act.
Additionally, Trump has promised to eliminate taxes on tips for service workers and cut taxes on Social Security benefits for seniors.
