Author: Davit Shatakishvili
On November 5 of this year, the United States will hold a major election, seeing Republican Donald Trump competing against the current Vice President, Democrat Kamala Harris. Studies suggest that their chances of winning are nearly equal. With economic prosperity ranking as a top priority for American voters, the economic policies of the presidential candidates will greatly impact the decisions of the American electorate. At this point, it is useful to examine the primary economic platforms of each candidate.
The Economic Visions of Kamala Harris
Inflation
According to Kamala Harris, she will present Congress with proposed federal limits on price hikes for food producers and retailers within her first 100 days in office, as, during this time, addressing consumer prices will be one of her top priorities. She identifies the issue of “price gouging,” where companies set profit margins significantly above fair market rates to maximize their earnings, disregarding the balance of supply and demand. Her proposal also includes the idea to expand the authority of the Federal Trade Commission and other regulatory agencies to detect and address unfair price gouging practices. Harris also aims to have government regulators take a stronger stance on mergers and acquisitions within the major food industry, which she views as a key factor contributing to rising prices, as the merger of large companies can reduce competition, increase the risk of market monopolies, and hinder the entry of new competitors to the market.
Housing
Harris has announced plans to build three million new homes over the next four years, which she claims will help address the “serious housing shortage in America.” She also plans to propose legislative changes to introduce tax incentives for construction companies that build affordable “starter” homes, which are primarily targeted at first-time homebuyers. Harris also plans to allocate $40 billion to support businesses that develop affordable housing. Additionally, she aims to expedite the review process and issuance of permits to address the housing shortage more swiftly.
Harris claims that she can reduce rental costs by limiting bulk purchases of homes by investors and regulating price-setting practices. She believes these measures will curb profit-driven collusion among landlords, which contributes to rising rental prices. Harris also proposes a $25,000 down payment assistance program for first-time homebuyers over the next four years. While details are scarce, it is expected to be similar to the plan put forward by the Biden administration in March.
Medical Hosts
Harris stated that she will actively build on the efforts initiated by the Biden administration, which have enabled Medicare and other federal programs to negotiate with drugmakers to reduce prescription drug costs. The initiative aims to cut prices for some of the most expensive and commonly used drugs, by approximately 40-80 percent, starting in 2026. Additionally, Harris has pledged to collaborate with state agencies to eliminate $7 billion in medical debt for up to three million eligible Americans.
Tax Benefits
Expansion of Child Tax Credit (CTC) – The child tax credit is a government program designed to assist families with the costs of raising children by reducing their tax liability. Additionally, if the family does not owe any taxes to the state, they can receive the credit amount as a cash payment. To put it simply, if a family owes $3,000 in state taxes and qualifies for a $2,000 child tax credit, they can reduce their tax bill by $2,000. This means they would only need to pay $1,000 to the state. Currently, the partial refund of the child tax credit is set at $1,700. For example, if a family owes $500 in state taxes, they can subtract this amount from the $1,700 credit and receive a $1,200 refund from the state.
According to Kamala Harris’s program, if she is elected, the child tax credit will increase to $3,600 for children under the age of 5 and $3,000 for children aged 5 to 17. Under current legislation, if no changes are made, the child tax credit amount will decrease from $2,000 to $1,000 starting in 2026.
Expansion of Earned Income Tax Credit – The Earned Income Tax Credit (EITC) is a tax credit designed for low- and middle-income earners. It works in a similar way to the child tax credit, by reducing the amount of tax owed and potentially providing a cash refund if the credit exceeds the tax liability. Under current law, the EITC provides more benefits to individuals with children than it does to those without. Harris’s proposal seeks to address this disparity by increasing the benefits for individuals without children. Additionally, Harris’s plan proposes lowering the age requirement for receiving EITC. Currently, only individuals between the ages of 25 and 64 qualify, but the new plan would extend eligibility to anyone over the age of 19.
The Economic Visions of Donuld Trump
Inflation
According to Donald Trump, on his first day back in the Oval Office, he plans to sign an executive order instructing all agency heads and Cabinet Secretaries to “use every tool and authority at their disposal to defeat inflation and to bring consumer prices rapidly down.” Trump has stated that one of his strategies for lowering prices involves eliminating “every single costly job-killing regulation,” though specific details on this approach are not yet available. Trump has also consistently claimed that he will reduce prices by boosting oil and gas production. However, energy prices in the United States are heavily influenced by the global oil market, which is beyond the president’s direct control.
Tariffs
Trump has announced plans to implement additional tariffs if he returns to office, including a minimum 10% tariff on imports from all countries, and up to an extra 60% tariff on imports from China. According to an estimate released in May by the Peterson Institute for International Economics, these tariff rates could cost the average family up to $1,700 a year. Trump has also not ruled out the possibility of increasing the tariffs to 20%. He has repeatedly claimed that the new tariffs will help bring back jobs and boost revenue for the country. However, economists generally agree that tariffs are a costly method for supporting American manufacturers. In March, Trump also stated that he would impose a new 100% tariff on all cars made outside the U.S. if he wins another term.
Tax Benefits
Donald Trump is considering making key provisions of the 2017 Tax Cuts and Jobs Act (TCJA) permanent. This includes extending aspects of the law that are set to expire after 2025 or have already expired.
Extension of the individual income tax provisions of the TCJA – Under the TCJA, if a person earns $50,000 a year, their income is taxed at different rates for different portions. For example, they might pay 10% on the first $10,000 and 12% on the next $40,000, reflecting the graduated tax brackets. Under the TCJA, the top tax rate a person pays on a certain amount of income is set at 37%, down from the 39.6% rate that was in place before the TCJA. In addition, the “standard deduction” is a fixed amount that a person can subtract from their income before calculating their taxes. Prior to the TCJA, the standard deduction was $6,350, while under the TCJA, it was increased to $12,000. Currently, the “standard deduction” amount is $14,600. If Trump wins, this amount is expected to increase further. In 2017, the TCJA reduced the corporate income tax rate from 35% to 21%. Trump has announced plans to further lower this rate to 15%.
Elimination of taxes on Social Security benefits – Social Security benefits offer financial support to retirees, individuals with disabilities, veterans, and other vulnerable groups. Beneficiaries are required to pay taxes on approximately 50-85% of their benefits, depending on their income level. Trump’s proposal is to make Social Security benefits completely tax-free. Under this plan, individuals receiving these benefits would no longer be required to pay any additional taxes on them, regardless of their income.
Elimination of taxes on tips – Trump’s economic vision also includes the elimination of taxes on tips, which are additional income received by individuals employed in the service sector alongside their service fees. According to Trump, eliminating taxes on tips will help individuals who receive a substantial portion of their income through tips to retain more of their earnings.
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The debates on September 10 highlighted the distinct economic visions of the candidates, each with unique priorities. Kamala Harris’s economic plan centers on bolstering the middle class through tax breaks, reducing economic and social inequality, protecting labor rights, improving access to healthcare, and addressing the housing shortage. Donald Trump’s economic vision emphasizes tax cuts, deregulation, boosting energy independence, and pursuing protectionist policies through higher tariffs. With less than two months until the U.S. presidential election, candidates are intensifying their campaigns. As the race progresses, it will become clearer whose vision aligns more closely with addressing the country’s pressing challenges – an aspect likely to have the greatest influence on the voters’ decisions.
