Kamala Harris plans will cost Americans

Higher taxes, few measures that will fuel economic growth

Harris’ economic plans have some clever ideas and some nonsensical ones. Copying Donald Trump’s “no tax on tips” was clever since it is a low cost item that will benefit primarily lower wage people in service industries.

Harris plans to give first time home buyers $25,000 towards the cost of their first home. With an average American home today costing over $400,000, the idea is clever but largely theater. The real barrier to home ownership is supply and mortgage rates and her plans are primarily inflationary rather than tending to bring down interest rates.

Harris plans to raise corporate taxes to 28% from 21%. That 7 percentage point rise in corporate taxes will punish low income Americans since corporations don’t pay taxes, they collect them and pass them on in price. Any additional federal revenue will come from prices paid for the goods and services the corporations produce and will fall primarily on the lower income Americans. Higher corporate taxes are popular with poorly informed voters but useless as a tool to improve income inequality, and to the extent any of the tax increase is retained by the corporations it manifests itself in lower investment and lower profits from which to pay dividends to investors and pension funds. This policy will garner votes and harm those Harris pretends she wishes to aid.

By contrast, Harris proposal for tax credits for builders who build starter homes is a step in the right direction depending on the degree it provides an incentive for home builders to construct more affordable homes, although the corporate tax increase will see input materials rise in price that may offset the proposals value as an incentive.

Restoring the child tax credit and the proposed $6,000 credit for first children is another copycat policy but welcomed by families struggling to afford to raise kids. Trump’s $5,000 credit for all children will do more to assist those families than Harris’ complicated $6,000 credit for first children and $3,600 credit for all other kids, but it is nonetheless a reasonably sound policy.

Promises to stop grocers from “price gouging” [not gauging'] is total theater since grocers’ profit margins are so low little benefit is possible.

Harris proposes to cap the cost per person of prescription drugs at $2,000. The U.S. prescription drug industry is an estimated $678 billion industry in 2025 rising to $1.1 trillion by 2033. With a population of 331 million, the proposal will do little to lower aggregate drug costs in 2025 but will shift about $500 billion of costs from patients to government by 2033, adding trillions to the federal deficit over time. Since most prescription drugs are already covered by corporate compensation plans for many Americans, the benefit may be to corporations more than patients.

On balance, the Harris economic plan is not a radical left-wing plan but is cleverly constructed to appeal to voters without actually providing much in the way of benefit in relation to the Trump plan, and should help her towards her goal of winning in November. More radical economic policies are likely post election (if she wins) including the potential “ban on fracking” which Harris now says she no longer intends to enact but is almost certain to carry out in some form given her dedication to the specious “climate change” narrative that pretends CO2 causes climate change. Failure to encourage continued high levels of oil & gas output threaten not only the U.S. economy if the result is higher commodity prices but also the world economy if U.S. sourced LNG is less available to energy starved Europe or to Asian economies.

Most Harris policies, other than those that mimic Trump policies, are unlikely to ever see the light of day since success in passing those into law will require a majority of Democrats in both houses of Congress as well as in the White House, and the policies themselves will have to pass certain tests of constitutionality in the Supreme Court where they err on the side of intervening in areas reserved to the States.