Critics have slammed Democratic presidential nominee Joe Biden's pledged to increase taxes solely on individuals making over $400,000 annually, claiming that his economic agenda would hit the spending power of middle-class families too.
A Stanford University’s Hoover Institution report released on Monday discovered that the former Vice President's taxation, insurance, regulatory and energy proposals would, on a long-term basis, lead to a reduction in full-time equivalent employment by around 3%, or 4.9 million jobs.
The @JoeBiden-Harris plan won't increase taxes on anyone making less than $400K and asks the super wealthy and big corporations to pay their fair share.— Kamala Harris (@KamalaHarris) October 19, 2020
According to the report, Biden's plan would also see real gross domestic product per capita drop by 8%, and capital stock per person would drop by 15%, seeing a $6,500 decline in median income per household by 2030.
“He hits the economy from three directions at the same time. He punishes work, he punishes investment, and he makes us less productive,” said University of Chicago economics professor Casey Mulligan, who served as a former economic adviser to President Trump and the co-author of the report.
“And people understand from living through the Obama years that Obama just kind of hit you in a bunch of different ways, and it started to add up in the end".
Mr Mulligan attributed the widespread deregulation under the Trump administration push as leading to decreased internet service costs and prescription drug prices.
“We stayed with Trump and we watched all the things he did, and we saw prescription drug prices came down in the real world for the first time in 46 years from deregulation”, said Mr. Mulligan.
“Internet prices—they crashed", he added.
However, Harvard professor Jason Furman disputes this narrative, saying in a recent interview with Fox News that Biden’s stimulus package would lead to an influx of much-needed investment and lead to economic growth.
“The most unambiguously positive for the economy is that Biden would do a lot of fiscal stimulus up front,” said Mr. Furman, who is a former Obama administration economic adviser. “That’s why you tend to see when his odds improve for the election, the stock market goes up. That’s why you’ve seen a lot of nonpartisan sources like most of the investment banks predict that his winning would help growth certainly over the next couple of years".
Mr Trump’s economic plan includes continuing the heavy deregulation seen in the 2017 Tax Cuts and Jobs Act. While the Trump campaign has not outlined specific details, the president pledges to introduce a stimulus package while cutting middle-class taxes
The president “is talking about lowering middle-class tax rates, and his message of deregulation and lower taxes and good trade deals? You’re talking about prosperity, optimism, economic growth,” said Larry Kudlow, an economic adviser to the incumbent president and director of the US National Economic Council.
While speaking to Fox, American Action Forum president Douglas Holtz-Eakin alleged that Trump has a “fantastic record on controlling regulations".
“With all these spending programs come regulations to implement them,” said Mr. Holtz-Eakin, director of the Congressional Budget Office from 2003-05.
He said that the last time "we saw Joe Biden in office there was $100 billion in regulatory costs added every year for eight straight years. That’s nearly a trillion-dollar disguised tax increase that comes along with these spending programs".
“That’s why they aren’t as stimulative as you might think", he added.
The Hoover Institute is an explicitly partisan body that leans conservative and advocates deregulation and market policies. The study’s other authors include Kevin Hassett, a former Trump administration official, and economists Cody Kallen and Timothy Fitzgerald.
Amid the ongoing recession resultant from the coronavirus, Joe Biden pledged to rase corporate taxes from 21% to 28% and add a 12.4% Social Security payroll tax on those with the highest incomes.
A CNBC analysis of high-tax states discovered that a Biden plan would see the highest earners in California contribute a combined state and federal rate of 62.6%. It also found the New York rate would hit 62% in New York, leading to multi-millionaire rapper 50 Cent declaring his support for President Trump on Instagram.
FACT CHECK: This is Biden talking to a crowd full of strangers. I mean unless the event was restricted to people only making $400,000 and up then he’s clearly telling average people their taxes are going up. https://t.co/1wlltkv8ZQ— Zac (@ostattoo80) October 16, 2020
Biden claimed that his tax plan will affect top earners alone, saying that expanded tax credits on earned income and dependent and child care and a $15,000 tax credit would aid in first-time home buyers, increasing overall demand and economic activity.
“I’m not going to raise taxes on a single solitary American making less than $400,000 a year,” said Mr. Biden to an audience in Florida last week.
“You won’t pay a penny more. It’s a guarantee".
One independent study supports the Biden campaign's claims, finding that the progressive tax policy would see economic growth bolstered. The report by Moody's Analytics found that if the Democrats control both the House and Senate, US real gross domestic product would be $960 billion bigger at the end of a Biden term than a second Trump term if Republicans seize both houses.