I had an email conversation recently with my dear friend Evan, who is an economist. He was outraged about how Trump was throwing out half-baked ideas on tax cuts. We’re talking about Trump’s ideas to get rid of Federal taxes on Social Security benefits, tips, and overtime pay.
Evan said, “Instead of empowering workers by strengthening labor law or providing support to unions, this is the king throwing trinkets to the populace.”
He also quoted the Washington Post saying, “The best empirical evidence on the impact of the 2017 Tax Cuts and Jobs Act is that economic growth offset just two percentage points of the 41 percent decrease in corporate tax collections that resulted from the legislation.”
In other words, Trump’s first shot at changing taxes resulted in very little economic growth, and cut our corporate tax revenue nearly in half, causing the deficit to explode.
It’s clear that for several reasons, Trump’s ideas are not economically sound. As Evan said, “It is really hard to campaign against this. He can promise to give away unlimited goodies because he just doesn't care about consequences.”
Why Trump’s ideas are genius – politically
Here's what I think. Trump, whatever his myriad faults, is much more adept at putting out economic ideas that people can easily glom onto than the Democrats are. This is why people think Trump is better on economic issues.
When I was a waitress in college, tips were not taxed, and this made my income higher than what I had taken home from my previous job, at a department store. My mom thought the department store was much classier, but when I explained the economics to her, she got it.
I’m sure the service workers in the swing state of Nevada get it, too. Sure, higher wages would help service workers much more than a tax cut on tips. But who’s talking about eliminating the tipped wage, or even raising the minimum wage? Not Democrats. Trump's the only one talking directly to tipped workers.
As for overtime pay, it translates very easily into weekly or monthly dollars in the average person's mind. Let's say I make $10/hr regular and $15/hr overtime, and work 20 hours of OT in a week. The extra $5/hr adds up to $300 gross/wk, or $1200 for four weeks. If I got my 20% in taxes back, that would be $240. That could mean an extra trip or two to the grocery store. It feels like real money to a low-wage hourly worker.
And no tax on Social Security benefits? As a retiree myself, I can tell you, that would be thousands of dollars a year in my pocket.
The average hourly worker probably doesn't know or think much about how tax cuts like this, without replacing the revenue to the government, would be really problematic. What they hear is, "Trump sees me and he will help me."
Compare and contrast: Kamala Harris on the economy
Here’s a look at Harris’ proposed economic ideas from PBS. And here’s what she has on her website. Suffice it to say, there’s nothing that fits into one sentence, or even one paragraph. Compare that to the aforementioned Trump ideas to “get rid of Federal taxes on Social Security benefits, tips, and overtime pay.”
Taxes
Halfway through her second paragraph on the website, she says, “As President, she will fight to cut taxes for more than 100 million working and middle class Americans while lowering the costs of everyday needs like health care, housing, and groceries.” Sure, that’s nice. But how much of a tax break would I get, if I even fell into her 100 million people? What is she lowering costs on, and how much? Trump talks about the cost of bacon!
The answers are not there. She says she’ll cut taxes with the Child Tax Credit and the Earned Income Tax Credit. People don’t know what that means in terms of dollars, or whether they would qualify. They do know what they earn in tips every week.
She mentions it in passing, but she should be pounding on the need for fair taxes on millionaires and billionaires. This is an idea most people support. Also, the GOP is gearing up for a deficit-reduction plan next year that will gut our middle and working classes, “for the sake of our children.” We need to define the problem as the wealthy not paying their fair share, early and often.
Housing
Nothing excites me more about this campaign than the fact that housing, the # 1 issue for most Americans, is finally on the table.
Harris starts off this discussion by talking about building 3 million homes. We have 330 million people in America, so this wouldn’t come close to solving the problem that people can’t buy homes. Also, it would take years. What about today’s housing crisis?
Again at the end, after a lot of mumbo jumbo, she says: “Vice President Harris knows rent is too high and will sign legislation to outlaw new forms of price fixing by corporate landlords.” Really?
Renters need lower rents, not an end to something abstract like "new forms of price fixing," which most people probably don’t even know about. The only way to lower current rents, which are up around 20% on average since 2019, is rent control. What is her stance on that? Yes, we need to build affordable housing down the road, but people need relief now.
How about AOC’s plan for big investments in public housing? Does Harris even know about it? The plan addresses the real problems. Harris just doesn't seem to have any good ideas about this # 1 issue.
A few ideas about crafting ideas that would resonate
Taxes. Harris could say something like, “We're going to lower federal tax brackets for people who work hard every day, but don’t make six figures.” Let’s say you’ll get an average $500 back if you earn $50K or less. (At present, you’d owe about $1K on $25K, and $6K on $50K.) A simple story and a tangible benefit, and a sense of fairness, for someone at that income level.
We could lower taxes on the upper middle class too, if we were raising them on the rich. I'd be talking about how a $100K person is paying more taxes than a $10 million person, and how they would change that.
Unions.
Support for unions is a big, and potentially resonant, idea that separates Harris from Trump. Currently the AFL has a plan to organize a million new union members. (This sounds like a lot, but is actually a small increase from current levels.) Harris could say, “We’ll make it easier for workers to join unions by reining in greedy corporations who don’t respect their rights. We’ll help unions organize 5 million new members in the next two years by doing x, y and z.”
Further, Kamala could win young voters by appearing on picket lines with Amazon and Starbucks workers. She could win in the South by showing up for Waffle House workers. Save the fine print. People understand that not all these ideas will come to fruition.
Stay Tuned
Harris is due to release new economic proposals this week. Some polls on the economy are going her way. Here’s hoping we get something good!
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