West LA Times

With less than 80 days until election polls close, voters and pundits are beginning to examine the economic and tax proposals being introduced by the presidential candidates on the campaign trail.

UCLA law professor Kimberly Clausing, who previously served as a top tax official at the U.S. Treasury Department for the Biden administration, provided insights into several key policy areas.

On taxes

“Candidate Harris is looking to expand the child tax credits again. Those tied to COVID assistance in the American Rescue Plan were very effective in reducing child poverty, but they have expired. Just a two (2) percentage point increase in the corporate tax rate, from 21% to 23%, would be more than enough to fully fund the child tax credit proposal. In my view, there are good reasons to raise the corporate tax. It’s a more efficient tax than many people think because it’s mostly paid by very large companies that already have a lot of market power. About 90% of the corporate tax base is less than one half of one percent of all corporations that pay taxes. This tiny sliver of corporations earns the lion’s share of the profits. The corporate tax is also a progressive tax that mostly burdens shareholders and owners of capital rather than workers.”

“The ‘no tax on tips’ idea that both candidates have talked about while visiting Nevada is not a particularly important tax policy development. It’s really a proposal that is more about winning Nevada than good tax policy. However, if this proposal were enacted, it could create a lot of problems, so policymakers would need to set up important guardrails.”

On housing policy

“Candidate Harris’ housing policy is interesting -- there are both supply-side policy elements and demand-side elements. The supply side includes a focus on governments working to make it easier to build housing, as well as tax credits that would support housing development. Whereas subsidies for down payments on home purchases, targeting first-time home buyers or those that don’t have intergenerational wealth, affect housing market demand. While some of those goals are understandable, fueling demand won’t help with housing shortages, so supply-side policies are a better way to get at the housing problem.”

On tariffs

“One of the major differences between the candidates is that Trump is proposing a massive consumer tax in the form of tariffs. Tariffs make both imported and domestic goods more expensive, which disproportionately impacts the poor and middle class. This fiscal switch that Trump has suggested that would shrink income taxes while putting much more fiscal reliance on tariffs pushes tax burdens away from those at the top toward the middle and lower class. That’s one of the most important and least reported economic elements of what’s on the ballot in November.”

“Furthermore, raising tariffs could create recessions, depressions and even war. Trump has talked about putting 10 percent or even 20 percent tariffs on every country in the world. Those trade policies are a lot more dangerous than people may recognize. It’s not about just protecting a job at home; it’s about reducing cooperation with the world, making everyone pay more, and shooting yourself in the foot in a pretty dramatic fashion.”

On immigration

“Immigration is a really important economic issue. Part of why the U.S. economy has done so well every year, including recently, is because of immigration. The labor market in the U.S. is much stronger than it would be without immigrants. Both candidates want to enforce border control but Trump’s plan to deport many people would tighten labor markets introduce significant negative economic shocks and harm economic growth."

"The deportations that Trump has suggested are particularly morally and economically repugnant," Clausing continued." Economically speaking we’re taking people who are already playing useful roles in our economy and sending them back And morally you’re tearing apart families' lives."

"For some states and localities immigrants can initially be burdened but even in those instances by time immigrants children grown up they usually exceed fiscal contribution Americans whose families been here several generations So average US economy whole gets fiscal boost when there immigration You have take long view."