Ex-President Donald Trump is preparing to present his case to a collection of esteemed economists, asserting that he can alleviate the financial struggle of American citizens by eliminating restrictive guidelines and bolstering the production of fossil fuels if he is granted a second term. Instead of maintaining a strong belief in the free market’s efficiency, Trump is promoting the promise of future prosperity by adopting a hands-on approach to management. The crux of his argument rests in cutting destructive red tape and supercharging the fossil fuel sector, which he envisions as the key to price reduction and robust economic growth.
On Thursday, Trump is expected to reiterate this viewpoint, aiming to convince the economists that his strategy is the nation’s best economic bet. The presentation is scheduled to follow his appearance in a town hall on Fox News, a platform that Trump used to highlight his concerns about Vice President Kamala Harris’s potential influence on the country’s business ecosystem. Harris has been portrayed as a menace to large enterprises, purportedly set to push these critical drivers of the economy to relocate from the US should she be victorious.
Highlighting Harris’s dangerous potential influence, Trump suggested a radical reduction of the corporate tax rate to 15% from the existing 21%. Such a move is a salivating prospect for corporations, and it is framed as a transformative step towards business-friendly regulatory landscapes, including the absence of taxes on tips and Social Security income. It’s worth noting that upon his presidency in 2017, Trump confronted a corporate rate of 35%, which he skillfully managed to drop through a well-executed bill.
Trump and Harris seemingly embody the economic yin and yang, advocating for radically different directions for the corporate tax rate. However, both camps are adamant that their candidate’s stance provides the optimal route for American business. Trump’s promise of reduction and deregulation is poised against Harris’s rhetoric of higher corporate rates—an economic tug of war that is emerging as a focal point of this year’s election.
While Harris and Trump’s standpoints appear polarised, the argument becomes even more nuanced when looking at the perceptions of the general public. Back in August, an AP-NORC poll revealed a slight tilt in favor of Trump—with approximately 45% of adults being convinced that he would administer the economy more effectively. On the other hand, only 38% believed that Harris would excel in this role.
Harris has hinted at raising the corporate tax rate to lofty heights of 28%, a legacy left by the drastic reduction introduced by Trump. Under the guise of promoting entrepreneurship, Harris offers policies aimed at making it increasingly simple to form new enterprises supposedly to enhance middle-class prosperity—a strategy perceived by some as a one-way ticket to economic stagnity.
Unsurprisingly, Trump’s proposed policy of implementing tariffs to bring back manufacturing jobs to the US has been met with skepticism. Critics, dominantly economists, argue that these import taxes could exacerbate inflation—a state that is already under his constant promises to slash costs. Looking back at 2022, inflation peaked impressively at 9.1%, but whispers indicate that due to certain measures it has thankfully shrunk to a more manageable 2.9% last month.
Despite the criticisms, under Joe Biden’s administration, tariffs on China that were instituted by the Trump administration were kept intact, and all exports of advanced computer chips to China were halted. This decision has remained controversial, illustrating a clear divide in the two administrative approaches and highlighting the rollercoaster nature of American economic policy.
Providing additional fuel to the fire, Harris has argued for a top capital gains rate standing at 28%. This contrasts starkly with Biden’s ambition to nearly double the current rate to 39.6% for investors earning beyond $1 million—an idea which does not sit well with those who believe in free-market principles. Both Harris and Biden are vocal about their desire to raise a separate tax rate on investment income, a move not compatible with Trump’s vision of American economic prosperity.
Recently, Harris expressed her interest in escalating tax deductions related to business start-up expenses, with the ambitious target of processing 25 million applications to form new companies within the upcoming four years. Such a goal does not sit comfortably with everyone, associated by many with greater public expenditure, decreased individual responsibility, and possible sector imbalances.
Overall, the choice between Trump and Harris offers a stark contrast for the future of the American economy. On one hand, there is Trump’s vision of lower corporate tax rates, reduced regulation, and a focus on fossil fuel production. On the other hand, there is Harris’s plan to facilitate entrepreneurship through increased taxes—a strategy often unpopular among traditionalists.
The contest between these two ideologies in the upcoming election will undoubtedly impact the future of the American economy. However, there are some concerns among the public about how the proposed changes might affect the economy and the cost of living, particularly in light of potential complications such as trade wars and inflation.
While the AP-NORC poll conducted in August provided slight favorability to Trump’s economic management over Harris’s, everything is still uncertain. How these perspectives will play out remains to be seen, and the final decision will rest with American voters. Even amidst all the debates and controversies, one thing remains clear: the upcoming election will be crucial in deciding the direction of America’s economic trajectory.