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Kamala Harris' economic policy: Roll back tax cuts, expand health care and middle-class tax breaks

Kamala Harris' economic policy: Roll back tax cuts, expand health care and middle-class tax breaks

Much like Biden, Harris is an advocate of higher taxes on businesses and high-income households, economists say.

Sen. Kamala Harris has a reputation as a prosecutor who cut both ways. Similarly, her positions on economic issues ranging from affordable housing to Wall Street have elicited muted praise — along with some caveats.

As Joe Biden’s choice for vice president, Harris, a California Democrat, shares many of the former vice president’s economic priorities, but she has also shown a willingness to go her own way or reach into the more progressive end of the party’s toolkit on a broad array of financial and economic hot-button topics.

The pandemic


“I think her policy perspective is very consistent with the need to help hard-pressed households that have been slammed by the pandemic,” said Mark Zandi, chief economist at Moody’s Analytics. “I think she’s focused on the right things.”

Most notably, Harris supported the idea of a $2,000 monthly stimulus check during the pandemic, a policy also advocated by Sen. Bernie Sanders, I-Vt., and former Democratic presidential contender Andrew Yang.

“The platform of the day that’s going to get people's attention has to be pandemic policy,” said Joseph Mason, professor of finance at Louisiana State University. “The $2,000 per person makes complete sense. This is a pandemic. This is something very, very rare."

Mason also said that Harris’ pledge to fight for social and racial justice has pandemic-specific ramifications, given that low-income and communities of color have been disproportionately hit by COVID-19. Democratizing access to a vaccine, when one becomes available, by insuring that low-income and essential workers are near the front of the queue could provide Harris with populist support and momentum for more wide-ranging health, safety and security initiatives, he said.

“There's a tremendous opportunity to promote social unity in line with meaningful public health goals by making sure that grocery store workers, fast-food workers — all these people who have been in touch with the public, toiling away to provide for their families — can get it,” Mason said. “You’re showing that there’s not an elitism. That would be, to me, a tremendous public health and social initiative. You can leapfrog from that into health care access.”

Health care costs


In the short term, Harris pledged to shore up the Affordable Care Act, and outlined a 10-year transition plan to overhaul the nation’s piecemeal health care system and rein in soaring costs projected to reach as much as $6 trillion a year by the next decade.

Initially a proponent of the “Medicare for All” cause championed by Sanders, Harris later backpedaled (a reversal some pundits said caused her to lose ground in the primary fight) and introduced a hybrid that would include a public Medicare option while still letting for-profit insurers compete.

Harris touted many proposals first pushed by Sanders to pay for the program, including changes to income, payroll and estate taxes to make them more progressive in addition to higher taxes on businesses and the richest Americans.

Wall Street


While similar to Sanders’ overall model for paying for an overhauled health care system, Harris tweaked her version by lopping out an incremental income tax increase she said would hit the middle class too hard and replacing it with a tax on Wall Street trades: Stock trades would be taxed at 0.2 percent, or $2 per $1,000, and bond trades would be taxed at half that.

Experts say this would have to be done strategically to avoid inadvertently squashing financial activity or driving it to offshore tax havens. “I do think you have to be very careful how that’s designed and implemented, but I definitely think that’s a place we should look for additional revenue,” Zandi said.

“We found that there is reason to be cautious about the design of any financial transaction tax, particularly if you design it so it can be easily evaded,” said Garrett Watson, senior policy analyst at the Tax Foundation. “Especially looking at that as a revenue source for health insurance, you need that to be a stable source of revenue."

Housing Affordability


Harris advocated for helping people struggling with the high cost of rent, proposing a tax credit for renters paying more than 30 percent of their income in rent and utilities. “Prior to the pandemic, one of the key policy concerns was around the affordable housing crisis, both for rent and homeownership,” Zandi said. “It was contributing to the increase in homelessness, which she obviously saw firsthand in California.”

But economics experts caution that this policy only addresses half the problem: There is still a nationwide shortage of housing stock attainable for many lower- and middle-income households, and subsidizing rents could have an unintended consequence of driving those costs higher. “I’d be paying more attention to increasing the supply of affordable housing as opposed to helping support rental payments,” Zandi said.

“I think it is good to get off this platform of everyone should own a home … so rental assistance is worthwhile,” Mason said. “Anytime you give a subsidy like that, you’re aiding a market … You need to make sure that just doesn’t leak out the other side in profit,” he said. “It’s a complex web of incentives.”

Income and taxes


Harris has stated support for a national $15-an-hour minimum wage, and said she wants to penalize companies that skirt the rules on worker pay and “empower” labor unions that have been weakened by “right to work” laws.

But a much higher-profile priority for Harris is the reversal of the GOP-backed Tax Cuts and Jobs Act decreases in tax rates for businesses and rich Americans. “Much like Biden, she’s an advocate of higher taxes on businesses and higher-income, wealthy households,” Zandi said.

The platform laid out on Harris’s website promised to “reverse President Donald Trump’s trillion-dollar tax cut for big corporations and the top 1 percent.” Those funds would go toward one of her signature policy initiatives: a refundable tax credit that would effectively function as a big expansion of the Earned Income Tax Credit.

The LIFT (Livable Incomes for Families Today) the Middle Class Act, which Harris introduced in 2018, would give a tax credit of up to $6,000 for households with annual income under $100,000.

On this issue, Watson said Harris was pushing the envelope further than her would-be boss. “We haven't seen something of that scope or scale from Biden,” he said. “One perceived advantage is you take something like that and make it permanent… and move the ball forward on what they think is good tax policy in the long run.”

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