Both former President Donald Trump and Vice President Kamala Harris are continuously making new promises.
Trump recently announced plans to eliminate taxes on tips, a proposal that received applause from his supporters. Harris then followed suit with a similar proposal, which also garnered applause. Trump further proposed the idea of not taxing overtime, which was met with more applause.
However, offering narrow tax exemptions can lead to negative consequences. In a new video, economist Allison Schrager explains how these exemptions can result in unintended outcomes.
Schrager points out that implementing specific exemptions for certain groups can influence the behavior of both workers and employers. For example, the proposal to eliminate taxes on tips could lead to more individuals being paid through tips, affecting hiring practices in industries such as restaurants.
While the desire for lower taxes is understandable, providing selective exemptions may not be the most effective approach. Schrager emphasizes that economists from both the left and right are in agreement that such proposals can have detrimental effects.
Additionally, Harris’ promise of implementing more rent control has raised concerns. Rent control, although appealing on the surface, can have negative impacts such as discouraging landlords from renting out properties. Schrager warns that such policies can create a hostile environment for landlords, ultimately reducing the availability of rental properties.
On the topic of tariffs, both Trump and Biden have faced criticism for their trade policies. Schrager highlights the benefits of free trade, which can lead to lower prices and increased income. However, tariffs can limit choices and raise prices for consumers.
Addressing the growing national debt is identified as a crucial issue by Schrager. With the current rate of debt accumulation, urgent action is needed to prevent future financial crises.
While real reform may be challenging, it is essential for addressing long-term economic challenges. Instead of making unrealistic promises, focusing on sustainable solutions is key.
As Schrager aptly summarizes, there are flaws in the promises made by both sides of the political spectrum.
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