Michigan elections FAQ: Where Trump, Harris stand on economy and taxes
- Inflation and foreign threats to automotive manufacturing have Michigan voters focused on candidates’ economic plans
- Harris promises middle-class tax credits and higher corporate tax rates
- Trump wants to cut corporate taxes and add a 10% tariff on imports, promoting American-made products
The issue: The economy is perhaps the top issue in this November’s elections, polls show, and perceptions about it vary widely.
Vice President Kamala Harris and other Democrats tout historic job growth, record-low unemployment and plans to raise taxes on the wealthy, while former President Donald Trump and Republicans cite elevated inflation, the cost of household goods and worker shortages.
With Trump-era individual tax cuts and the lowest corporate tax rates in over 70 years set to expire at the end of 2025, both parties are fighting for the opportunity to influence what the nation’s businesses and over 100 million households have to pay each year.
How it is important to Michigan: In Michigan, the state’s jobless rate in July increased to 4.4% — the highest in over 18 months. The state has averaged 4% unemployment for the last two years, and while Michigan’s rate has typically been higher than the national average, it’s dropped sharply since 2020 and returned to pre-pandemic levels.
Inflation is a looming issue, hitting 9.1% in 2022 before falling to 2.5% in August. As a result, higher prices for food and many other consumer goods have led to an erasure of household income gains post-pandemic. Other metrics are more positive though: More people are rejoining the workforce and average weekly earnings are rising.
Perhaps of more interest in Michigan is how both parties intend to deal with the prospect of inexpensive electric cars from China — a product which may strongly affect the state’s over $124 billion industry. The Biden-Harris administration finalized tariff hikes to 100% on the vehicles earlier this month, a move Trump wants to take further with 60% tariffs on all Chinese-made goods.
Related:
- Bridge Michigan Economic Dashboard
- Michigan household income drop among nation’s worst. Blame inflation
Experts have long said the transition to electric cars will hurt auto-job heavy states like Michigan because electric cars require fewer parts — and fewer plants and workers to build those parts. A forecast by the Southeast Michigan Regional Council of Governments acknowledges the region could lose over 200,000 jobs by 2050 depending on when the transition occurs.
Where Harris, Democrats stand: Democrats say the economy is strong, pointing to 1.5 million in new construction and manufacturing jobs. They say the 26 months that the national jobless rate has been below 4% is the longest ever, and that wages increases have offset inflation.
They also say two laws passed in 2022, the CHIPS and Science Act and the Inflation Reduction Act, will lead to more growth and help “onshore” some of the high-tech manufacturing that became a supply-chain nightmare during the pandemic.
As part of her plan for what she calls a middle-class “opportunity economy,” Harris has proposed boosting manufacturing by spending $100 million on “strategic industries of the future,” along with various tax credits and tax breaks for individuals and companies.
She wants to expand the child tax credit — from $2,000 to $3,600 per child, and $6,000 for new parents — create a $25,000 tax credit for first-time homebuyers and a $50,000 tax break for small business startups.
Harris has said she won't raise taxes on anyone making less than $400,000 a year, but she wants to raise corporate tax rates from 21% to 28%.
The vice president has also proposed a 28% tax on long-term capital gains for those making $1 million or more annually, up from the current maximum 20% tax on assets owned for more than one year.
“I believe we have an extraordinary opportunity to make our middle class the engine of America's prosperity, to build a stronger economy where everyone everywhere has a chance to pursue their dreams and aspirations, and to ensure that the United States of America continues to out-innovate and out-compete the world,” Harris said during last month.
Where Trump, Republicans stand: Some Republican lawmakers have floated the idea of cutting the deficit by eliminating the Harris-backed Inflation Reduction Act, which includes subsidies for buying electric cars and lowered prescription drug costs, including capping the cost of insulin at $35 per month for seniors.
Trump has promised to extend 2017 personal income tax cuts and further lower the corporate income tax rate, from 21% to 15% for companies that manufacture products domestically. He’s also proposed exempting tips, overtime pay and Social Security benefits from taxation.
In a bid to support domestic producers, the former president has also proposed a 10% tariff on all imports and 60% tariffs on Chinese goods — up from 12% now. It had been at 3% before his administration quadrupled the rate in 2017.
“Tariffs are the greatest thing ever invented,” Trump said in a recent Michigan speech. Experts, however, worry his plans could lead to retaliatory tariffs and higher inflation, meaning higher prices for consumers.
Trump has claimed inflation under Biden-Harris was "driven up by their bad energy policy." He vows to "drill baby, drill" but hasn’t spelled out specifics to boost domestic oil production that has already reached record levels.
Trump has also assailed Jerome Powell, chair of the Federal Reserve Bank whose board sets key interest rates for the nation’s central bank. Despite a recent interest rate cut, Trump has suggested he would “strongarm” Powell — whom he appointed in 2017 — to lower rates further.
“Between the energy and the spending, the inflation went up, and food prices came with it, and rent came with it, everything came with it,” Trump said last week in Warren. “And we had, I think, the worst inflation we’ve ever had. And we’re going to bring it down. So we’re going to bring it down with energy and interest rates.”
Read more:
- Bridge Michigan Economic Dashboard
- Michigan household income drop among nation’s worst. Blame inflation
- In mid-Michigan, economic worries persist. So does disgust of politics
- AP: Trump's economic plans include proposed tariffs, tax cuts and no taxes on tips. Details are scarce
- Reuters: What do we know about Kamala Harris' economic plans on taxes, housing, manufacturing?
- Axios: Harris and Trump economic policies divide voters, economists
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