Harris economy will spike your taxes by $1,100 and make America's working class suffer
Trump passed tax cuts in 2017 and Harris has repeatedly said she'd overturn them. That means her presidency would damage the economy and make America's working class suffer.
If you thought the Biden economy was bad, you should be terrified of Vice President Kamala Harris.
If elected president, she will likely spend her first year fighting to kill the expiring provisions of former President Donald Trump’s 2017 tax cut law while pushing for higher taxes on job creators and a dramatic taxpayer-funded expansion of the welfare state. The consequences will be as predictable as they will be painful: less money in working-class Americans’ pockets due to tax hikes and lost wages, millions of fewer jobs, and millions more people swapping gainful employment for a government check.
That’s our conclusion after analyzing many of the policies that Harris has supported. Her first year in office would give her a golden opportunity to enact a sweeping economic agenda. At the end of 2025, most of the personal and small business tax cuts of the 2017 law will expire. Harris, who has long opposed every part of that law, could bring about one of the largest tax hikes in American history without lifting a finger.
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In a forthcoming study, we show just how damaging that would be. If the personal income tax cuts were allowed to expire, Americans would see their federal income taxes rise by $1,100, on average. Additionally, every income decile would see their average after-tax income drop.
Working-class Americans would be the hardest hit. For example, a household of four earning the median income with typical deductions would see their tax bill rise by $1,500, according to the Tax Foundation. A single mom with one child earning roughly half the median income would fork over $800 more to the federal government.
That single mom and those married parents could get hit again by job losses. We estimate that the expiration of the 2017 tax cuts would destroy nearly 2 million full-time jobs. That makes sense: Small businesses have used the law’s 20% pass-through deduction to fund a new era of growth. Take the deduction away and many will be forced to shrink. Job creators will also suffer because the higher income tax rates will leave families with less money to spend.
Harris may let some of these tax cuts partially survive, possibly because of opposition from Congress. She may also feel pressure to keep her recent promise not to raise taxes on the middle class. But in exchange, she’ll likely demand a heavy price — likely a wealth tax or raising the corporate tax rate from 21% to 28%. The 2017 law permanently cut that rate from 35%, sparking dramatic wage growth and job creation.
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While Harris claims that raising corporate taxes will "put money back in the pockets of working people," it will inevitably do the opposite by cutting wages, killing jobs, and raising prices on Americans already struggling with inflation. The damage will likely offset any benefits from extending other parts of the tax cuts.
Whether from an income tax hike or a corporate tax hike, Harris will have hundreds of billions of dollars to spend, and she’s already made clear her intentions. In her August 16 economic speech, she endorsed a permanent expanded Child Tax Credit, modeled on the temporary version President Joe Biden signed into law in 2021.
Our modeling suggests her proposal would cost nearly $1.2 trillion over the next decade. She simultaneously called for expanding the credit even further, calling for a $6,000 check for families with newborns — another $100 billion expense.
This is an attack on work, plain and simple, because Harris wants to effectively make the credit a cash subsidy, distributed monthly, that’s completely disconnected from work. As one of us showed in a 2021 study, the expanded Child Tax Credit combined with other federal handouts paid more than the median wage, discouraging recipients from looking for work.
University of Chicago researchers estimated that if the policy were made permanent, 1.5 million parents would stop working altogether, yet deep child poverty would remain unchanged. With her doubly expanded credit, Harris would push even more parents out of work and onto permanent welfare. The inevitable result will be a weaker economy that generates less growth and tax revenue—even as taxpayers spend significantly more on politically favored handouts.
This is the Harris economy in a nutshell: Higher taxes, lower wages, fewer jobs, and a vicious cycle. One of her campaign’s main themes is "moving forward," but Kamala Harris will inevitably take our economy backward.
Michael Greibrok is senior research fellow for the Foundation for Government Accountability.
