During a campaign speech on Wednesday, Democratic presidential nominee, Kamala Harris proposed a bizarre plan to increase the capital-gains tax rate, one that won’t make billionaires feel the pinch of their wealth but would weigh heavily on the middle class. Contrary to the plans of President Joe Biden, who proposed a relatively higher at 39.6%, Harris suggested a modest 28% for Americans earning over $1 million. This less aggressive approach showcased at the Throwback Brewery in North Hampton, New Hampshire, showed a strikingly business-friendly perspective missing from Biden’s policy.
Capital gains tax pertains to the profits one bags by selling an asset, such as a stock or real estate. While Biden’s plan targets the billionaires with a whopping 39.6% tax rate, Harris veers away drastically with her own plans. Presently, the rate stands at 23.8%, inclusive of a 20% flat rate plus a 3.8% on investment income. This is a noticeable deviation that makes one ponder the potential impacts.
Harris argues that government-induced investment catalyzes economic growth and strengthens our economy, but critics suggest this is simply pandering to wealthy businesses and protecting their interests over the interests of ordinary citizens. The proposal is certainly in stark contrast to Biden’s economic plan which takes a more balanced and even-handed approach towards both businesses and workers. However, this seems to be the path Harris has chosen to tread.
In typical fashion, the Democratic hopeful did not miss the chance to criticize the Republican nominee, Donald Trump for his tax cuts for the wealthiest Americans and corporations. Behind the veil of a six-week-old populist campaign, Harris continues to blaze her unique trail. Does this mean that billionaires and corporations can anticipate more leniency and fewer hurdles under a Harris-led administration?
In March, when Biden publicly unveiled his budget, he made a strong case that households raking in over $1 million should pay an equivalent 39.6% marginal rate like any other high-paid worker. This equitable approach, however, seems to lack in Harris’s vision. An unnamed source associated with the proposal reportedly suggested that the vice president believes a lower capital gains tax will incentivize investment and expand small businesses under her Democratic presidency. Is this a truly democratic approach or just a veiled attempt to pander to the wealthy?
In a stark attempt to diverge from Biden’s plans, Harris seems to be under pressure from her major donors to rethink this. These donors, ranging from Wall Street to Silicon Valley, are not pleased with Biden’s proposal to target the wealthiest Americans and are urging Harris to reconsider. The donors’ influence over her decisions on tax increases raises serious questions on the transparency of her campaign.
A group of 100 venture capitalists who supported Harris even polled its members on the taxing of unrealized capital gains, with majority overtly disagreeing that it could hinder innovation. However, Harris’s proposal does not diverge from Biden’s new 25% tax on unrealized capital gains of Americans worth at least $100 million, even if the assets remain unsold. This particular aspect calls into doubt the coherence and consistency of her tax policies.
Adding more confusion and ambiguity to her economic stance, Harris claimed to support a new minimum tax for billionaires. She also asserted that corporations should ‘pay their fair share’ by raising the corporate tax rate. But her proposed 28% capital-gains tax rate suggests otherwise. So the question remains – is Harris truly committed to making billionaires and corporations pay their fair share, or are these just empty words meant to woo voters?
The San Francisco Democrat also broadcasted an ambitious intent to generate 25 million new small business applications by January 2029. She further grinned about plans to support business incubators and simplify regulations for small businesses. Broad as these claims are, without concrete steps or mechanisms, these ideas seem to be little more than lofty campaign promises.
In a contradiction on taxes, Harris also lashed out at Trump. She accused him of planning to end federal programs giving loans to small businesses and supporting tax cuts for billionaires and corporations leading to a $5 trillion increase in the national debt. But the discrepancy between her criticism of Trump and her proposed leniency towards the wealthy raises eyebrows about the sincerity of her stance.
While crafting her economic agenda, Harris drew mostly from the Biden administration’s proposed plans. She resolved to increase tax credits for families with children and other deductions for working families, but one wonders how this gels with her softer stance towards the wealthy. No matter how much she borrows from Biden’s plans, her economic policy seems to be missing the essence of his approach.
Previously, Harris had made news for proposing a federal ban on price gouging of food and groceries, with an annual cap of $2,000 on prescription drug costs and $35 a month on insulin. She suggested it was an expansion of existing tax credits that middle-class Americans fall back on. But her tax policy seems to contradict this, indicating her pandering to the wealthy rather than helping the middle class.
Harris also suggested a $25,000 down payment assistance strategy for first-time homebuyers. The plan appeared to be a sweetened deal for middle-class Americans. But the question that remains is, can people trust her promises given the evident inconsistency that exists in her economic plans?
In wrapping up, the inconsistency in Harris’s tax policy proposals lights up glaring questions around her notion of economic fairness. Despite echoing some of President Biden’s popular plans, her soft stance on the wealthy makes it seem as though she’s less committed to advocating for economic equality. Only time will tell if she can reconcile these major differences and really stand up for middle-class America.