In recent political discussions, both Donald Trump and Kamala Harris have been pushing the idea of hyper-targeting tax subsidies to specific activities or occupations, a trend that raises concerns about the fairness and efficiency of the tax code. While this practice is not new, the proposals put forth by these candidates have taken the concept to an extreme, leading to a tax system that could favor certain groups while neglecting others. Trump has been particularly aggressive in this approach, making specific income streams tax-free for a select group of workers while imposing tax liabilities on others doing similar work, which threatens to deepen existing inequalities in the tax system.
This hyper-targeting appears to be a dual strategy, primarily aimed at curbing deficit increases while also courting specific voter demographics. For instance, both candidates have announced their tax-free tips proposals in Nevada, a crucial swing state with a high concentration of tipped workers, and are trying to appeal to suburban women, notably amidst contentious debates on social issues like abortion. Such targeted tax breaks present an uneven playing field: tipped workers could benefit from tax exemptions that would not apply to their wage-earning counterparts in similar income brackets. This selective advantage raises questions about fairness and the underlying rationale for these disparate tax treatments.
Trump’s proposals extend into specific health-related tax breaks, most notably his plan to make in vitro fertilization (IVF) treatments tax-free. However, he has yet to articulate how this would be implemented, leaving ambiguity around whether it would involve a mandate for insurance companies or take the form of a new refundable tax credit. While existing state laws require limited insurance coverage for IVF, it seems problematic that his initiative would not also extend to other fertility treatments or healthcare needs. This raises fundamental questions about the criteria for eligibility for tax credits, especially when similar treatments for less publicized health issue, such as cancer care, do not receive the same benefits.
Another area of concern includes Trump’s proposal to allow parents to deduct the cost of raising newborns, which averages around $13,000 annually. While this deduction might favor families with resources to itemize deductions, it risks excluding low-income families who would benefit more from the standard deductions already available. Additionally, Trump has remained silent on the idea of increasing the Child Tax Credit (CTC) but has suggested potentially layering this newborn deduction on top of existing credits, raising questions about the efficiency of such measures. Rather than continually funneling benefits toward a narrow definition of “care,” it could be argued that the tax code should consider a more expansive range of family expenses, such as caring for elderly parents or children with disabilities.
The push for a corporate tax rate decrease—from 21% to 15%, contingent on manufacturing in America—also reflects a pattern of undefined benefits that may have unintended effects. An arbitrary interpretation of what constitutes “making” a product in a specific location could create compliance challenges and diminish the overall effectiveness of such tax policy changes. Instead of focusing solely on corporate incentives, the debate should offer broader solutions, perhaps encompassing a wider range of subsidies that do not favor select industries or worker groups.
Lastly, while hyper-targeting tax benefits serves immediate political interests, it raises significant long-term implications for tax equity and administrative efficiency. The IRS may face substantial challenges in defining eligibility for various proposals—from which workers qualify for tipped income exemptions to determining the fertility treatments eligible for tax credits. The trend toward hyper-targeting in tax policy not only threatens to compound existing inequalities but also risks complicating the tax administration process, making it less effective overall. Ultimately, as this election season continues, a focus on inclusive and equitable tax solutions should take precedence over short-term political gains.
