Good evening. Wednesday brought grim news, as four people were killed and at least nine injured at a school shooting outside Atlanta. On the campaign trail, Vice President Kamala Harris used a visit to New Hampshire to unveil a proposed tax break for small businesses. Former President Donald Trump is holding a Fox News town hall that will air tonight.
Here’s your fiscal update.
Trump’s Tax Proposals Would Cost a Staggering $10.5 Trillion: Analysis
Republican presidential nominee Donald Trump and his running mate, Sen. JD Vance, have promised or proposed a bevy of tax cuts and breaks as they campaign for the White House. Together, those plans would cost as much as $10.5 trillion over a decade, according to a new Bloomberg News tally based on preliminary estimates from independent budget analysts.
That’s a staggering sum. Just how big is it? The total would surpass the combined budgets of every domestic federal agency, Bloomberg’s Erik Wasson and Enda Curran write.
“Even if Congress were to eliminate every dollar of non-defense discretionary spending — projected to be $9.8 trillion over the next 10 years — it still wouldn’t offset the estimated expense of the wide-ranging tax cuts Trump and Vance have floated in recent weeks,” Wasson and Curran say. “The combined cost of the Trump plans is so big that if Congress were to try to pass the tax cut proposals and keep spending flat, it means they could continue to fund the military, federal benefit programs, like Social Security, pay interest on the debt — and nothing else.”
The breakdown of what Trump and Vance have proposed is pretty straightforward:
* Extending the expiring 2017 tax cuts would cost $4.6 trillion over 10 years, according to the Congressional Budget Office.
* Lowering the corporate tax rate from 21% to 15% would shave another $874 billion from federal revenues, according to the Committee for a Responsible Federal Budget.
* Raising the child tax credit from $2,000 per child to $5,000 would cost some $3 trillion.
* Exempting Social Security benefits from taxation would cost another $1.8 trillion, while Trump’s “no tax on tips” pledge would trim $250 billion in revenues.
Trump hasn’t laid out many plans to pay for his tax promises beyond higher tariffs, which analysts say would only offset some of the cost — but could also undermine economic growth and spur inflation.
The Republican campaign said in a statement to Bloomberg that Trump would cut wasteful spending and boost energy production to pay for his plans and lower the national debt, but the math there is highly questionable — as is the prospect of Congress passing all the promised tax changes, even if Republicans control both chambers. “Congress is not going to pass a $10 trillion deficit-financed tax cut,” Kyle Pomerleau, a senior fellow with the right-leaning American Enterprise Institute, told Bloomberg.
The bottom line: Take Trump’s tax promises with a big grain of salt, because Congress is unlikely to pass them all.
Harris Calls for 28% Capital Gains Tax, Breaking With Biden
As she continues to fill in the details of her economic platform, Vice President Kamala Harris on Wednesday called for raising the capital gains tax to 28% for those earning more than $1 million a year, offering a smaller increase than the one proposed by President Joe Biden.
The current capital gains tax rate is 20%, which Biden has proposed raising to 39.6% for top earners. There is an additional 3.8% investment tax for those with high incomes, which Biden wants to raise to 5%, producing a potential top rate of 44.6%. Harris did not say what she wants to do with the investment tax, but The Wall Street Journal reports that she favors raising it along the lines Biden has proposed, producing an all-in top rate of 33% for her proposal – more than 10 points lower than Biden’s all-in top rate.
Harris said her proposal strikes a balance between encouraging investment and ensuring that wealthy investors pay enough in taxes overall. “While we ensure that the wealthy and big corporations pay their fair share, we will tax capital gains at a rate that rewards investment in America’s innovators, founders and small businesses,” Harris said at a campaign event in Portsmouth, New Hampshire.
In addition to the capital gains tax proposal, Harris called for providing more support for small businesses and entrepreneurs. Harris wants to raise the small business tax deduction from $5,000 to $50,000, and create a standard deduction that can be used by all small firms.
Harris said she will set a goal of 25 million new small businesses in her first term, surpassing the record 19 million seen under Biden. “As president one of my highest priorities will be to strengthen America’s small businesses,” she said.
Trump Victory Could Mean Slower Economic Growth: Goldman
Analysts at Goldman Sachs warned this week that if former President Donald Trump regains the White House this fall, his plans to raise tariffs and sharply restrict immigration could hurt the economy next year.
“We estimate that if Trump wins in a sweep or with divided government, the hit to growth from tariffs and tighter immigration policy would outweigh the positive fiscal impulse,” the analysts wrote Tuesday. If enacted, the policies could reduce growth by as much as half a percentage point in the second half of 2025.
The policies proposed by Vice President Kamala Harris would produce stronger growth by comparison. The Goldman analysts said Harris’s plan to boost tax credits and spending would offset her proposed increase in the corporate tax rate to 28%, up from its current 21%.
“If Democrats sweep, new spending and expanded middle-income tax credits would slightly more than offset lower investment due to higher corporate tax rates, resulting in a very slight boost to GDP growth on average over 2025-2026,” the analysts said.
Number of the Day: 7.67 Million
In another sign that the labor market is cooling, the number of available jobs in the U.S. dropped to 7.67 million in July, the Labor Department reported Wednesday. The total is 237,000 lower than the downwardly revised figure for June, and is the smallest monthly tally in more than three years.
The ratio of available jobs to unemployed workers fell, as well, dropping to 1.1 – well below the peak of more than 2 recorded in March 2022, and lower than the level seen before the pandemic began.
The latest report was not all bad news, though. Both the hiring rate and the quits rate moved modestly higher in June, suggesting that employers and workers have some degree of confidence in the economy.
Fiscal News Roundup
- Kamala Harris to Pare Back Biden’s Capital-Gains Tax Proposal – Wall Street Journal
- Harris Pushes 28% Capital Gains Tax Rate on $1 Million Earners – Bloomberg
- Harris Departs From Biden on Capital Gains Tax Boost – Politico
- Trump Tax Cuts Would Cost More Than Almost All Federal Agencies – Bloomberg
- Trump and Harris Zero in on Economic Policy Plans Ahead of First Debate – Associated Press
- Goldman Sachs Sees Biggest Boost to US Economy From Harris Win – Reuters
- ‘People Need to See It': How Politics Hung up a $42 Billion Biden Internet Buildout – Politico
Views and Analysis
- How Democrats Made Project 2025 One of Their Top Anti-GOP Attacks – Ashley Parker and Maeve Reston, Washington Post
- Kamala Harris Doesn’t Need Policy to Win – Peter Rothpletz, New Republic
- Federal Workers Should Be Back in the Office – Bloomberg Editorial Board
- Biden, Harris, Trump, Vance and the Dumbest Economic Idea – Wall Street Journal Editorial Board
- How Harris Wins (and Trump and the Republicans Blow It) – Ross Douthat, New York Times
- How Trump Wins (and Harris and the Democrats Blow It) – David Brooks, New York Times