Harris Breaks Ranks with Biden on Capital-Gains Tax Rate Policy

WASHINGTON — In a significant move, Democratic presidential candidate Kamala Harris has outlined a revised capital-gains tax proposal that diverges markedly from President Joe Biden’s earlier budget suggestions. During a campaign event, Harris proposed a 28% capital-gains tax rate for individuals earning at least $1 million, a notable reduction from Biden’s suggested 39.6% top rate on such earnings.

“We are committed to ensuring that the wealthy and corporations contribute their fair share, but we also want to implement a capital-gains tax rate that encourages investment in America’s entrepreneurs, small businesses, and innovators,” Harris stated.

Her announcement took place at Throwback Brewery in North Hampton, New Hampshire, where she provided further insights into her economic initiatives. She emphasized that governmental support for investment drives widespread economic growth and job creation, thereby strengthening the economy.

The proposal was first reported by the Wall Street Journal. Currently, the capital-gains tax sits at 23.8%, which consists of a 20% flat rate plus an additional 3.8% tax on investment income.

In her relatively short campaign to date, which spans six weeks, Harris has adopted a populist stance regarding taxation, similarly to Biden. She has criticized Republican nominee Donald Trump for endorsing tax cuts favoring the wealthiest Americans and large corporations.

When Biden presented his budget in March, he argued that affluent households earning in excess of $1 million should face the same 39.6% tax rate on their capital gains, akin to the tax rates on high-income workers’ wages. However, a source familiar with Harris’ proposal indicated that she believes a lower capital-gains tax will offer “an even greater incentive for investment and access to capital for small businesses” under her proposed administration.

The decision comes after a report in the New York Times, which detailed that influential donors from Wall Street to Silicon Valley were urging Harris to reconsider the tax increases outlined in Biden’s budget, particularly those targeting high-net-worth individuals. According to the Times, a group of 100 venture capitalists backing Harris surveyed its members, with many agreeing that taxing unrealized capital gains could hinder innovation.

However, Harris’ proposed capital-gains tax rate does not challenge a more contentious element of Biden’s budget concerning unrealized capital gains. The president’s proposal includes a new 25% tax on investment gains for Americans whose assets amount to at least $100 million, regardless of whether those assets have been sold.

During her address in New Hampshire, Harris reaffirmed her support for implementing a minimum tax for billionaires and emphasized the necessity for corporations to “pay their fair share” by increasing the corporate tax rate.

She also expressed a goal of generating 25 million new small business applications by the conclusion of her prospective first term in January 2029. Her strategy includes fostering business incubators, reducing bureaucratic obstacles that hinder small businesses from launching, such as streamlining the tax-filing process, and increasing tax deductions for startup expenses from $5,000 to $50,000.

“This is essentially a tax cut for those starting small businesses,” Harris explained.

Furthermore, Harris criticized Trump, alleging that his policies would dismantle federal programs providing loans to small businesses and reinforce tax cuts for billionaires and corporations that would exacerbate national debt beyond $5 trillion.

“We understand the numbers,” she remarked during her speech.

Throughout her campaign, Harris has largely expanded upon the initiatives of the Biden administration, committing to increase tax credits for families with children and enhancing deductions for working families. Last month, she proposed a federal ban on food and grocery price gouging, capping annual prescription drug costs at $2,000 and limiting insulin prices to $35 monthly. She also aims to expand existing tax credits for middle-class Americans and provide $25,000 in down payment assistance for first-time homebuyers.

Source: USA Today