OH: Evaluating economic policies of Harris, Trump
It is election week. Every four years, most American citizens face the dilemma of whether they should vote for the Democratic or Republican candidate. But over the last several years, elections have only created more division among American citizens.
CNBC provides statistics regarding the 2020 election results by popular vote, where approximately 81 million voters supported President Joseph R. Biden Jr., and approximately 74 million voters supported former President Donald J. Trump.
There are too many factors to consider when looking at the right candidate to vote for, but reviewing the proposed monetary policies, including business and individual taxes, is an important measure to judge.
There is an old saying that life has two certainties: death and taxes. Everyone will face death and pay some form of taxes throughout their lives. One crucial problem Americans believe regarding taxes is that corporations and the wealthy elite are not paying their fair share compared to the working class, and both candidates for the 2024 election propose vastly different plans to address this concern.
Vice President Kamala Harris suggests a radical idea to tax unrealized capital gains. Investopedia defines unrealized gains as an existing theoretical profit due to investments that have yet to be sold for cash. According to the Tax Foundation, taxpayers with a net wealth of at least $100 million will have to pay a minimum effective tax rate of 25 percent on unrealized capital gains such as stocks, bonds and private companies.
This sounds great, but examples like 1913's income tax show taxes targeted against wealthy elites only harm the working class. Anyone making less than $3,000 ($52,100 today) if single and $4,000 ($69,500 today) if married were exempt from paying taxes back when this law was initially proposed.
PBS estimates that 60 percent of Americans were initially exempt from income taxes. When looking at the 2024 Federal Income Tax Bracket, you can be charged 12 percent on an income as low as $11,600 if single and $23,200 if married. It will only be a matter of time before the working class is asked to pay unrealized gains taxes as well.
On the other hand, Trump proposes expanding the 2017 Tax Cuts and Jobs Act (TCJA). The TCJA lowered the middle-class tax bracket from the previous tax brackets listed by the Tax Foundation. Trump proposes no official plan, but he did bring up the idea of replacing federal income tax with tariffs.
Tariffs are taxes placed on goods and services imported from other countries to raise revenue and protect domestic industries from foreign competition. Whether this is feasible is debatable, but many expert economists like Erica York believe this is unrealistic.
"Imports are a much smaller tax base than taxable income, and there's no way to squeeze enough revenue from taxing imports to fully replace taxing income. A swap like this would hike taxes on working-class taxpayers and invite harmful retaliation against US exports," York told CNN.
Harris also wishes to preserve parts of the TCJA, but key differences exist in what parts of the plan she will extend. For one, she plans to increase the highest tax bracket percentage from 37 percent to 39.6 percent, and their policies also differ regarding taxing businesses.
The TCJA initially slashed taxes charged against businesses from 35 percent to 21 percent. Trump plans to lower corporate tax rates to as low as 15 percent, whereas Harris plans to raise corporate tax rates to 28 percent.
Common arguments against raising taxes against corporations include lowering wages, incentivizing businesses to operate in foreign countries and reducing future economic growth.
At the same time, there are also downsides if our government chooses to cut corporate income tax rates even further. Examples include creating a larger unequal income distribution, making it harder for governments to supply lower-income households with stimulus packages and benefiting the wealthy more than lower-income individuals.
There are various reasons why some Americans will lean favorably toward one candidate over another. Harris advocates for the abortion rights of young women and affordable health care, whereas Trump is more focused on regulating immigration and loosening restrictions on the Second Amendment. There are also other important economic factors to look at, such as inflation, housing prices and national debt, when choosing who to vote for.
I will speak as someone who grew up in a low-income household. Both candidates provide awful tax proposals, in my opinion, but these are the only two candidates who have a realistic chance of becoming our future president.
If I had to pick one, I would slightly prefer Harris' plan because she seems better for working-class families in the long term, whereas Trump's policies primarily focus on the short term.
Jesse Oh is a senior in the School of Arts and Sciences and the School of Communications and Information majoring in economics and journalism and media studies. Oh’s column, "What's Going On Outside of Rutgers?" runs on alternate Tuesdays.
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