Vice President Kamala Harris has touted a new economic plan to drive “broad-based economic growth,” but her policies contradict this message. Her narrowly targeted America Forward tax credit for “industries of the future” and tax hikes for the rest would reshape investment yet fail to stimulate more investment overall—much like former President Donald Trump’s protectionist proposals for a universal tariff and higher tariffs on China that would reallocate, but not grow, economic activity.
Tax policies, whether rates, deductions for initial investment costs, or credits for investment and production, can change the cost of capital. A higher cost of capital leads to less capital investment, while a lower cost of capital leads to more capital investment.
