Harris’s “opportunity economy,” with its price controls, tax increases, and expanded government spending, is likely to exacerbate inflation and lead to economic disaster.
The adage, “Those who do not learn from history are doomed to repeat it,” is applicable to the tax and economic policies Vice President Kamala Harris has outlined for her presidential campaign. Harris’s proposals, rooted in past mistakes like price fixing, tax increases, and government spending, could prove devastating for the economy.
The national economy is already on uncertain ground. Recently, the Department of Labor revised job growth projections, revealing that the economy added 818,000 fewer jobs from April 2023 through March 2024 than originally reported. This significant reduction points toward a possible recession. Inflation remains problematic, with the prices of necessities continuing to soar under the Biden-Harris administration. As a result, Americans are earning and saving less.
Here are some examples of price increases during the Biden-Harris reign:
(Source: Americans for Tax Reform)
To address these issues, Vice President Harris is proposing what she calls an “opportunity economy.” Her plan aims to make groceries more affordable, increase housing availability and affordability, and bolster the middle class. However, Harris and President Joe Biden blame corporate America for the high prices, accusing grocery stores, food producers, and pharmaceutical companies of “price gouging.”
Harris proposes to empower the Federal Trade Commission and state attorneys general to investigate and penalize companies involved in price gouging. However, the details of her plan are vague, particularly regarding how the government would define and enforce such penalties. Prices vary by region, making it difficult to standardize what constitutes gouging. For example, a can of ground coffee might cost less in Des Moines than in New York, and milk prices fluctuate depending on location.
Grover Norquist, President of Americans for Tax Reform, notes, “Government setting prices for goods and services has a very long history of failure.” During the Great Depression, President Franklin D. Roosevelt attempted price controls through the National Recovery Act (NRA), which regulated wages and set prices across industries. Although popular initially, the NRA was eventually ruled unconstitutional by the Supreme Court due to its stifling of competition and favoritism towards big businesses.
President Richard Nixon also tried price controls in the 1970s, which failed and exacerbated the economic crisis. Norquist points out that these controls led to gasoline rationing in the late 1970s, a situation that contributed to President Jimmy Carter losing his re-election bid. The price controls were later lifted by Ronald Reagan, who also reduced government spending and halted excessive money printing, ultimately bringing inflation down.
Harris’s tax policy, as undefined as it is, is equally concerning as it features a range of tax increases and expanded tax credits, rather than broad-based relief for all. It remains unclear whether she would fully renew the Tax Cuts and Jobs Act or only select provisions. Without releasing a full blown tax proposal, or even a well developed outline, political observers have been left to piece together what the Vice President seeks to do based on comments from the candidate and her aides. Her plan seemingly includes expanding existing tax credits and introducing new ones to address housing and economic insecurity. For instance, Harris proposes a $25,000 federal subsidy for first-time homebuyers, alongside other incentives for home construction and ownership. However, federalizing housing is likely to drive costs higher.
Harris wants to increase the current $3,600 per child tax credit to $6,000 and expand the earned-income tax credit. Notably, former President Donald Trump and Senator J.D. Vance have proposed raising the child tax credit to $5,000, indicating that Republicans may struggle to compete with Democratic proposals. Interestingly, Harris has also borrowed a page from Trump’s playbook by proposing to eliminate taxes on income from tips.
However, the “opportunity economy” agenda would also likely include aggressive tax hikes, such as:
(Source: The Committee to Unleash Prosperity)
Harris’s tax plan, as it’s understood, and its 28% corporate tax rate would surpass those of China (25%) and the European Union (21%). This rate could stifle economic growth, leading to more businesses offshoring and outsourcing jobs. Contrary to common belief, a higher corporate tax rate would not just affect big businesses; it would also impact jobs and push costs onto consumers, undermining Harris’s goals.
The proposed 39.6% top income tax rate would be crippling for small businesses and individuals, and the capital gains tax would be the highest since its inception. Particularly alarming is Harris’s plan to impose a 25% tax on unrealized capital gains—a first-of-its-kind measure. Although initially targeting individuals with income and assets over $100 million, this threshold could quickly be lowered, affecting a broader range of Americans.
Harris’s “opportunity economy,” with its price controls, tax increases, and expanded government spending, is likely to exacerbate inflation and lead to economic disaster. On the campaign trail, Harris portrays herself as a champion of the working class, but her record suggests otherwise. According to the Tax Foundation, Harris has consistently favored higher taxes, even more so than President Biden. As a U.S. Senator, she was among the more progressive members, and her “opportunity economy” plan, despite its populist rhetoric, reflects a progressive, if not socialist, agenda.
History has shown that such approaches are not the solution to inflation. Roosevelt’s New Deal failed to end the Great Depression, and Nixon, Ford, and Carter all struggled to control inflation during their presidencies. As Grover Norquist succinctly puts it, “Government needs to spend less to solve inflation.” Yet, Harris’s plan would take more from taxpayers—through payrolls, energy, and capital gains taxes—while her spending promises would likely dwarf even these significant tax hikes.
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