If Vice President Kamala Harris becomes president and is able to pass her tax plan, it may cost the US economy nearly 800,000 full-time equivalent jobs, a new analysis has found.
The Harris plan is largely a continuation of President Joe Biden‘s 2025 budget, which would raise taxes on high earners, businesses and investors selling stocks.
Harris departs from Biden in her desire to offer a $25,000 tax credit to first-time homebuyers and eliminate tax on tips.
All told, think tank Tax Foundation believes this policy will cause a two percent decline in long-run GDP and a 1.2 percent dip in long-run wages, as well as a marked effect on employment.
‘Similar to the president’s proposals, we find that it would reduce the long-term growth of the economy, it would reduce American incomes relative to where they would otherwise be, and it would lose, rounding up, close to 800,000 jobs in the long-run,’ Garrett Watson, senior policy analyst and modeling manager at the Tax Foundation, told FOX Business.
Kamala Harris’ tax plan could cost the economy nearly 800,000 jobs, according to an analysis from the Tax Foundation
Garrett Watson (pictured) says the Harris tax plan creates ‘disincentives for work’
‘That’s mostly from both disincentives for work under her plan and for investment, which produces higher incomes and creates jobs,’ Watson added.
The foundation claims that just one out of her 17 major policy proposals will actually create jobs, and that’s eliminating income tax on tipped wages, an idea first popularized by former President Donald Trump.
Raising the net investment income tax from 3.8 percent to 5 percent and hiking the additional Medicare tax from 0.9 percent to 2.1 percent will cost 177,000 jobs, according to the analysis.
Harris wants to make the American Rescue Plan’s expansion of the earned income tax credit permanent and revive that law’s child tax credit, which offered families $3,600 per child under 6 before it expired in 2021.
Additionally, Harris wants to hike the child tax credit to $6,000 for newborns.
These tax breaks for families with children will cost 131,000 jobs, the analysis claims.
The next biggest job killer, according to the foundation, is Harris’ idea to raise the corporate tax rate from 21 percent to 28 percent.
That could subtract as many as 125,000 jobs from the economy, while also having the largest impact on the GDP.
The Tax Foundation analyzed how the tax policy from a second Trump term could affect the economy, concluding that his plans would lead to a net loss of 387,000 jobs in the long term
Raising the top marginal rate on personal income to 39.6 percent for people earning $400,000 as individual filers or $450,000 as joint filers would cost 86,000 jobs.
Taxing unrealized capital gains of over $5 million at death (or $10 million for joint filers), and taxing capital gains over $1 million at a 28 percent rate would cost 75,000 jobs.
The Tax Foundation also analyzed how the tax policy from a second Trump term could affect the economy.
Overall, his stated plans would lead to a net loss of 387,000 jobs in the long term.
If Trump succeeds in making the Tax Cuts and Jobs Act permanent, the law he signed in 2017 that expires in 2025, that will create combined 911,000 jobs.
However, Trump’s plan to increase tariffs on China to 60 percent and imposing a universal tariff of 10 percent on all goods imported to the US would cost 674,000 jobs.