Harris Parts Ways with Biden on Capital Gains Tax to Boost Small Business Growth

Vice President Kamala Harris recently announced an ambitious plan aimed at supporting new small businesses while outlining a tax strategy that diverges significantly from President Joe Biden’s proposals. Her plan includes a substantial $50,000 tax benefit for startups, which represents a significant increase from the current $5,000 deduction available to entrepreneurs.

During a rally in Portsmouth, New Hampshire, Harris stressed the importance of ensuring that wealthy individuals and large corporations pay their fair share of taxes. She advocated for a 28% long-term capital gains tax on individuals earning $1 million or more each year. This stands in stark contrast to Biden’s previous recommendation of a 39.6% rate for capital gains, leaving some uncertainty over how her position intersects with additional taxes proposed by Biden.

Harris’s suggested tax reform could reflect a strategic shift in addressing capital gains, possibly aligning with other measures she champions to tackle the influence of billionaires and major corporations. Among the proposed reforms, Harris expressed support for implementing a minimum tax on billionaires and increasing the corporate tax rate. She also proposed quadrupling taxes on stock buybacks, adding further dimension to her economic vision.

The announcement signifies a proactive step, as Harris and Donald Trump sharpen their economic narratives in anticipation of their upcoming debate. Trump is set to deliver his own economic address shortly after Harris, indicating a clear focus on economic issues from both candidates.

Harris aims to generate a historic 25 million new small business applications during her first term if elected, with her tax plan functioning as a vital tool in achieving this goal. The proposed $50,000 tax benefit is designed to offset the average startup costs of around $40,000 for new small businesses, allowing eligible businesses operating at a loss to delay claiming the benefit until they become profitable.

Moreover, businesses that are already profitable could have the flexibility to use the entire benefit over several years, strategically deducting their earnings and managing their taxes more effectively.

In addition to the tax initiatives, Harris promised to create a standard deduction for small businesses, aimed at simplifying the tax filing process and reducing costs. She is also keen on removing occupational licensing barriers that hinder workers from engaging in cross-state employment.

While specific cost estimates for these programs were not disclosed, Harris emphasized that her plan would increase access to venture capital and foster innovation through business incubators. It also aims to elevate the number of federal contracts awarded to small businesses, which could stimulate economic growth.

Most of Harris’s tax initiatives would likely need approval from Congress, as current tax laws, established under the 2017 Tax Cuts and Jobs Act, are due to expire next year. Beyond that, her administration would also facilitate low and no-interest loans to existing small businesses, supported by a fund to assist community banks and financial institutions in economically neglected regions.

Harris stated that her administration would focus especially on small businesses in rural areas, recognizing the unique challenges and opportunities present in those communities.

Meanwhile, both Harris and Trump continue to deliver populist economic messages, pledging to aid middle-class families. They share common ground on certain economic proposals, including a potential phase-out of federal income taxes on tipped wages.

In an effort to further clarify her policy agenda, Harris introduced multiple economic priorities last month. These include restoring the expanded Child Tax Credit from the American Rescue Plan, offering $25,000 in down payment assistance for first-time home buyers, capping prescription drug prices, and proposing a federal ban on food price gouging.

On the other hand, Trump has pushed for sweeping reforms in economic policy, including tax cuts for businesses and affluent individuals, paired with raised tariffs on imports, particularly targeting goods from China.