The key elements of the Harris-Walz tax plan are designed around restoring and expanding two major tax credits: the Child Tax Credit (CTC) and the Earned Income Tax Credit (EITC). Additionally, they aim to raise taxes on high earners and corporations by rolling back Trump-era tax cuts and increasing capital gains taxes for wealthier Americans. Specifically, the Harris-Walz plan proposes to:
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- Expand the Child Tax Credit to provide a $6,000 tax cut to families with newborns.
- Restore and increase the Earned Income Tax Credit for working families.
- Raise taxes on wealthy individuals and corporations, reversing Trump’s tax cuts, enacting a billionaire minimum tax, and increasing taxes on stock buybacks.
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While this plan might seem beneficial on the surface, a deeper analysis reveals a significant issue: these tax cuts and credits come at the expense of the very policies that foster long-term economic growth. Rather than focusing on stimulating job creation and promoting business investment, the Harris-Walz platform is built on redistribution, which has historically done little to create sustainable economic prosperity.
Tax Credits Don’t Solve the Real Problem
Tax credits, such as the CTC and EITC, have been central to many liberal tax plans. Harris and Walz are doubling down on this approach, but it is important to understand that tax credits do not stimulate real economic growth. While they provide temporary financial relief to families, they do not address the larger systemic issues that encourage job creation, business investment, and wage growth.
- Impact on Investment: One of the most damaging aspects of the Harris-Walz tax plan is the proposed increase in capital gains taxes, particularly the hike to 28% for those earning over $1 million. Capital gains taxes are essentially a tax on investment, and when you increase the tax burden on those making these investments, you discourage them from taking risks and putting their money into businesses. This leads to reduced economic activity, fewer new businesses, and ultimately, fewer jobs. Wealthy investors are crucial to driving innovation, creating startups, and growing the economy. Without them, the economy stalls.
- Impact on Job Creation: Similarly, Harris and Walz’s plan to reverse Trump-era tax cuts for businesses will hurt job creation. When businesses are faced with higher taxes, they are left with fewer resources to invest in hiring, expanding, or increasing wages for their workers. Rather than providing an incentive for businesses to grow and create more jobs, this plan imposes additional costs on them, limiting their ability to hire more workers. This will ultimately harm the middle class, who depend on these businesses for employment.
The Trump Tax Cuts Spurred Economic Growth—Reversing Them Would Set Us Back
Under the Trump administration, the U.S. saw a period of robust economic growth thanks in large part to tax reforms aimed at reducing the tax burden on individuals and businesses. The 2017 Tax Cuts and Jobs Act lowered the corporate tax rate from 35% to 21%, creating a more competitive business environment, which encouraged domestic and international investment. Additionally, it reduced income taxes across the board, allowing more Americans to keep a larger portion of their income and spurring consumer spending. According to the Tax Foundation, the Trump tax cuts led to significant business expansion, wage growth, and job creation .
Reversing these tax cuts, as proposed by Harris and Walz, would set us back. By increasing the corporate tax rate and raising taxes on capital gains, the Harris-Walz tax plan would undo much of the economic progress made in recent years. Businesses, particularly small businesses that benefited from Trump’s tax cuts, would face higher operating costs, limiting their ability to expand, hire, and innovate.
Furthermore, the reduced corporate tax rate was instrumental in attracting foreign investment to the U.S., making it a more competitive destination for global businesses. By increasing taxes, the Harris-Walz plan would make the U.S. less attractive to these businesses, leading to reduced investment and fewer job opportunities for Americans. The American Enterprise Institute noted that lowering corporate taxes increases GDP growth by creating a more favorable environment for investment and entrepreneurship .
The Harris-Walz Tax Plan Could Fuel Inflation
Another major concern with the Harris-Walz tax plan is its potential to further fuel inflation. Their expanded tax credits for families may sound like a welcome relief, but it will inject more money into the economy at a time when inflation is already a significant issue. As we’ve seen in recent years, when there’s an increase in demand for goods and services without a corresponding increase in supply, prices go up.
- Higher Consumer Prices: The Harris-Walz tax plan includes significant tax hikes for businesses, particularly those that rely on investment to grow. Faced with higher taxes, these companies will pass the additional costs onto consumers. As businesses increase prices to cover their tax liabilities, middle-class families will end up paying more for everyday goods and services, effectively canceling out the benefits of the tax credits they receive.
- Inflationary Pressures: The expanded tax credits will also put more disposable income into the hands of consumers, increasing demand for goods and services. However, with businesses facing higher taxes, the supply side of the economy won’t be able to keep up. The result? Higher prices across the board. This inflationary cycle will hit working families the hardest, as their purchasing power will erode in the face of rising costs for everything from groceries to gasoline .
Reagan’s Warning: Government Has a Spending Problem
While the Harris-Walz tax plan focuses on raising revenue by increasing taxes, it completely ignores one of the most important factors contributing to our economic challenges: government spending. As President Ronald Reagan famously said, “Government doesn’t tax too little; it spends too much.” This is truer today than ever before. The national debt has ballooned to over $33 trillion, and much of that is due to uncontrolled government spending.
Rather than focusing on cutting taxes and reducing the size of government, the Harris-Walz plan proposes new programs and expanded tax credits that will require even more government spending. This will only exacerbate the debt crisis, leading to higher interest payments and fewer resources available for critical programs like Social Security and Medicare.
The National Debt: A Ticking Time Bomb
One of the most alarming aspects of the Harris-Walz tax plan is that it does nothing to address the rapidly growing national debt. In fact, by expanding tax credits and proposing new government programs, their plan would only add to the deficit. According to the Congressional Budget Office, the national debt has nearly doubled in the past decade, reaching unsustainable levels. Without significant cuts to government spending, we are heading towards a fiscal crisis that will have long-term consequences for future generations.
Conservatives believe that fiscal responsibility is the key to long-term economic stability. Rather than raising taxes to fund more government programs, we need to focus on reducing spending, balancing the budget, and reducing the national debt. The Harris-Walz plan, by ignoring these issues, is simply kicking the can down the road and placing a heavier burden on future generations.
The Conservative Solution: Empowering the Private Sector
Conservatives understand that economic growth comes from empowering the private sector, not expanding government control. Instead of expanding government programs and increasing taxes, we should focus on policies that allow businesses to thrive, create jobs, and raise wages. The conservative approach to tax policy is built on the following principles:
- Lowering Taxes for Individuals and Businesses: When individuals and businesses are allowed to keep more of their hard-earned money, they are more likely to invest, expand, and innovate. This leads to higher wages, more job opportunities, and overall economic growth. Rather than penalizing success with higher taxes, we should be encouraging entrepreneurship and investment.
- Cutting Government Spending: The key to reducing the national debt and stabilizing the economy isn’t raising taxes—it’s cutting unnecessary government spending. By reducing the size of government, we can lower the tax burden on Americans and ensure that future generations aren’t saddled with unsustainable debt. Fiscal responsibility and balanced budgets are the cornerstones of conservative economic policy.
- Encouraging Investment and Innovation: By keeping taxes on investment low, we create an environment where businesses can grow, innovate, and create jobs. Instead of raising capital gains taxes and discouraging investment, we should be incentivizing wealthy individuals to invest in new ventures, which leads to job creation and economic prosperity for all Americans.
Conclusion: The Harris-Walz Tax Plan is the Wrong Path Forward
While the Harris-Walz tax plan promises middle-class relief, its real-world consequences will harm the very people it claims to help. By raising taxes on businesses and investors, discouraging job creation, and fueling inflation, their policies will stifle economic growth. Conservatives know that the path to a prosperous future lies in lowering taxes, cutting government spending, and empowering the private sector to do what it does best: create jobs and grow the economy.
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