Trump, Harris need to better explain impact of their economic plans | Opinion

In a jump ball presidential election, pocket book issues may determine the victor. According to an IPSOS poll, 88% of Americans say the economy is the issue most likely to determine how they will vote.

Vice President Kamala Harris centers her economic proposals around the robust use of government power to intervene in markets, increased taxes on business and high-income households, and a myriad of middle-class tax credits.

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She proposes an “economic opportunity agenda” that would expand child care and earned-income tax credits, extend Affordable Care Act premium subsides, provide first-time homebuyers with tax credits, and expand tax deductions for new small businesses.

The vice president blames the runaway increased cost of living on corporate greed. She proposes to control high costs by having the Federal Trade Commission enforce vaguely defined bans on “price gouging.” Something the Washington Post described as a “political gimmick.”

Former President Donald Trump’s economic agenda would reduce tax burdens, expand tariffs, and limit regulations on energy producers and other businesses. To place domestic companies on a level playing field with global competitors, Trump would impose across-the-board tariffs as high as 20%, or 60% on Chinese imports. Since American importers not foreign governments pay the tariffs, the nonpartisan Peterson Institute for International Economics estimates that the Trump tariffs would cost middle-income householders $1,700 annually.

Brian Riedl, a senior fellow at the Manhattan Institute, observes, “While all regulations are meant to accomplish some important goal, the overall economic effect of exorbitant regulation is typically higher prices, elevated business costs, and reduced economic growth.” Case in point is the bipartisan CHIPS Act, which was aimed at making the American semiconductor industry more competitive and productive. However, child care and wage mandates were included, which contribute to higher prices. Trump would be less likely to use regulations to achieve social objectives.

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Perhaps there is no greater schism between the candidates’ approach to the economy than tax policy. The individual tax cut included in the 2017 Tax Cut and Jobs Act (TCJA) are scheduled to expire in 2025 unless Congress extends them.

Both Harris and Trump would extend the act for the more than 90% of taxpayers earning less than $400,000 annually, at a cost to the Treasury of $3 trillion over the decade. Trump also supports extension of the tax cuts for the top 5% of earners, as well as reducing the corporate tax rate from 21% to 15%, which would reduce federal revenues by $460 billion over 10 years. Trump wants to eliminate the tax on Social Security benefits and tips. Harris also supports not taxing tips. Terminating taxes on Social Security benefits and tips would increase the deficit by about $1.7 trillion through 2035.

Harris would raise taxes on businesses and high-income households. The Wall Street Journal reported that her plan would impose the highest marginal income tax rate (44.6%) across all income types since 1986. She also advocates increasing the corporate income tax rate from 21% to 28%, and taxing the unrealized capital gains of wealthy individuals.

The vice president’s tax credit proposals will have a significant impact on the budget and deficit. According to the Center for a Responsible Federal Budget, expanded child care and earned-income credits, extended Affordable Care Act premium tax credits, $25,000 first-time homebuyer credits and affordable housing initiatives would increase the federal deficit by $1.7 trillion over the next decade.

The devil in the Harris and Trump economic plans is in the details. Both candidates need to do a better job explaining how their proposals would impact key economic metrics such as the gross domestic product, the federal deficit, job growth, and the economic well-being of working families.

Gary Sasse is the former director of the Rhode Island departments of Administration and Revenue and executive director of the Rhode Island Public Expenditure Council.

This article originally appeared on The Providence Journal: According to a recent poll, the majority of U.S. voters say the economy is the issue most likely to influence their vote.