Harris Campaign 2024: Tax and Spending Proposals
A Comprehensive Analysis
Topic:
Politics
by MPeriod
Posted 2 months ago
The 2024 Harris Campaign tax and spending proposals are designed to expand benefits for low- and middle-income households, boost economic support through tax credits, and fund these measures through increased corporate taxes. Our analysis, however, projects that these policies will result in increased deficits over the next decade, potentially leading to negative long-term economic impacts.
Key Takeaways
- Primary deficits increase by $1.2 trillion over 10 years on a conventional basis and by $2.0 trillion on a dynamic basis, factoring in a reduction in economic activity.
- The plan involves $2.3 trillion in new spending while raising $1.1 trillion in tax revenue over 10 years.
- GDP is expected to fall by 1.3% by 2034 and 4% by 2054, with significant reductions in capital investment and working hours.
- Low- and middle-income households benefit from increased transfers and tax credits, while higher-income households face greater tax burdens.
- The increased debt burden may negatively affect future generations, who will bear the costs of these policy changes.
Harris Campaign’s Budgetary and Economic Effects
The 2024 Harris presidential campaign has announced several spending and tax policy proposals, building on the groundwork laid by President Biden’s Fiscal Year 2025 (FY25) budget. The campaign’s policies include expanded benefits for low- and middle-income households, such as Child Tax Credit (CTC) expansions, Earned Income Tax Credit (EITC) increases, and new subsidies to support first-time homebuyers. These proposals would be funded by an increase in the corporate income tax rate.
While the Harris campaign endorses some tax provisions from President Biden’s FY25 budget, their official announcement does not cover all spending and tax provisions. We provide estimates of the budgetary and economic impacts based on available information.
Budgetary Effects
The Harris campaign’s spending increases total $2.3 trillion, while tax revenues increase by $1.1 trillion, leaving a primary deficit of $1.2 trillion over the next decade. When dynamic economic effects are considered, the deficit grows to $2.0 trillion.
| Provision | Cost (2025-2034) |
|---|
| Expand Child Tax Credit (CTC) | $1.662 trillion |
| Increase CTC for newborns | $132 billion |
| Expand Earned Income Tax Credit (EITC) | $126 billion |
| Permanent ACA premium tax credits | $225 billion |
| Down payment support for homebuyers | $138 billion |
| Raise corporate tax rate to 28% | $1.1 trillion revenue |
Dynamic Economic Feedback
Taking into account the negative economic feedback effects—such as reduced capital investment and labor supply—the primary deficit grows by $2.0 trillion. This reflects how certain aspects of the tax policy, such as increasing corporate taxes, could hinder economic growth.
Economic Impact of the Harris Campaign Proposals
The Harris campaign’s policies would likely result in lower economic output over the next 30 years. Below are the estimated changes to key economic indicators:
| Economic Indicator | Change by 2034 | Change by 2054 |
|---|
| Gross Domestic Product (GDP) | -1.3% | -3.9% |
| Capital Stock | -2.4% | -7.8% |
| Hours Worked | -0.7% | -0.7% |
| Average Wage | -0.8% | -3.3% |
| Debt Held by Public | +4.4% | +7.7% |
Long-Term Impact
- GDP falls by 1.3% by 2034, resulting in slower economic growth and reduced productivity.
- Wages decline across all labor groups, dropping by 0.8% by 2034 and by 3.3% by 2054.
- Hours worked decline as households receiving transfers reduce their labor participation.
Distributional Effects: Winners and Losers
The Harris campaign’s tax proposals are structured to provide relief to low- and middle-income households. Conversely, high-income households—especially those in the top 5%—face greater tax burdens due to the increased corporate tax rate.
2026 Distributional Effects by Income Group
| Income Group | Average Income Change | % Change in Income |
|---|
| First Quintile (Bottom 20%) | $2,355 | +18.0% |
| Second Quintile | $2,260 | +4.8% |
| Middle Quintile | $2,165 | +2.7% |
| Top 1% | -$8,965 | -0.5% |
| Top 0.1% | -$167,255 | -0.9% |
- Low- and middle-income households will see a significant increase in after-tax income due to expanded tax credits and transfers.
- Top-income earners will face losses due to higher corporate taxes, reducing their after-tax income.
Future Generations' Burden
While current lower- and middle-income households benefit, the debt burden imposed on future generations will be substantial. These future taxpayers will be responsible for financing the increased government spending, which could limit their economic opportunities.
Conclusion: Harris Campaign’s Fiscal and Economic Outlook
The 2024 Harris Campaign tax and spending proposals aim to deliver relief to millions of Americans, particularly low- and middle-income households, through expanded tax credits and support for first-time homebuyers. However, these measures would increase primary deficits by $1.2 trillion over 10 years, with even higher deficits when dynamic economic effects are considered.
Key Considerations:
- Long-term GDP declines are projected, leading to reduced investment and wages.
- Higher-income households face larger tax burdens, while lower-income households see significant gains.
- The increased debt could negatively affect future generations, raising concerns about the sustainability of these proposals.
