Kamala Harris flubbed the most important question of the campaign. And a big hat tip to Byron York, the veteran ace columnist of the Washington Examiner. Byron was referring to the economy, which, of course, is the most important issue in the campaign, and that was the first question of the debate, and it went to Harris: "When it comes to the economy, do you believe Americans are better off than they were four years ago?"
Byron York's key point about Kamala's answer was that there was virtually no there, there.
Her most heralded proposal is a $50,000 small business startup deduction. But actually, under current tax law, which is still the Trump tax cut law, new business owners can already deduct most early stage expenses like payroll and equipment costs.
Startup expenses are usually minimal. And so many small business startups will never spend $50,000, at least at the beginning. In other words, it's a poorly thought out plan. And, of course, she never mentioned her proposal to repeal virtually all of the highly successful Trump tax cuts, including the 100% immediate expensing bonus for the purchase of new machinery and equipment.
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That bonus depreciation is one of the most powerful, pro-growth policies for large, small, and new businesses. And it looks like Harris would repeal it. Plus, her so-called economic plan raises the top income tax rate to 39.6%, which is what most successful new and small business owners pay.
Her plan would repeal the 20% small business cost deduction embodied in the Trump plan. Plus, she would jack up the capital gains tax, which rewards successful small business owners. And on top of that, it raises the estate tax, which is another reward for successful small business owners.
So she can prattle on about a startup deduction, but really what one hand giveth, the other hand taketh away and then some. You wanna hear a major league tax cut plan for business? Here's Mr. Trump at the New York Economics Club last Thursday.
DONALD TRUMP: "The fifth pillar of my plan is to make the Trump tax cuts permanent. My plan calls for expanded R&D tax credits, 100% bonus depreciation expensing for new money factory investments, and a reduction in the corporate tax rate from 21% to 15% - solely for companies that make their product in America."
That plan led to an increase in cumulative real income pre-pandemic for typical working families of $6,400 during the Trump years, almost 5 times as much as the Biden-Harris gain of only $1,350. Now, the rest of Kamala's so-called economic plan is throwing out $25,000 of free money to buy homes -- which would of course jack up the price of new homes, which are already out of reach for young Americans.
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Then she touts a $6,000 refundable child tax credit, which amounts to a guaranteed basic income for those who do not work. That's her so-called opportunity economy.
Byron calls it "the government giving people taxpayer money so they can pay higher prices." He notes that many economists believe these kinds of proposals are too big, too broad, and not the best use of the money to help those most in need, that according to a WSJ news story.
By the way, Mr. Trump did double the child tax credit from $1,000 to $2,000, but on top of that, he slashed marginal tax rates for all individuals and, of course, all businesses, thereby providing incentives to work and invest across the board.
Now, Harris also wants to again increase the earned income tax credit, also fully refundable and the most fraud-ridden program in the U.S. government, with an estimated $22 billion in fraudulent or erroneous payments. And then remember in her economic speech in North Carolina, she proposed price controls on food and groceries, and who knows what else, an idea that was ridiculed by economists on both sides of the aisle.
Plus, her economic package was variously estimated at $2 trillion. Of course, that's on top of the $2 trillion Biden-Harris budget deficit that runs as far as the eye can see. She has never proposed a single reduction in federal spending and has never had an answer for record deficit spending, all of which would contribute to higher, not lower long-run inflation.
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So with all that, Mr. Byron York concludes that Kamala Harris never answered the question: "When it comes to the economy, do you believe Americans are better off now than they were four years ago?" And for millions of people, undoubtedly, that answer is no. And that's my riff.
This article is adapted from Larry Kudlow's opening commentary on the September 12, 2024, edition of "Kudlow."
