Kamala Harris scales back Joe Biden's massive capital gains tax plan as she proposes a more modest hike
PORTSMOUTH, NEW HAMPSHIRE: In an apparent move to distance herself from President Joe Biden's economic policies, Vice President Kamala Harris has put forth a proposal to adjust the long-term capital gains tax rate to 28% for wealthy Americans.
Biden's 2025 budget plan seeks a considerably higher rate of 39.6% for the same tax bracket.
Current and proposed tax rates
The long-term capital gains tax rate is currently set at 20%, with an additional 3.8% surtax for higher-income earners. This is applied when an investment is sold and the gains are realized.
Biden's budget proposal advocates aligning the capital gains tax rate with the highest income tax rate—pushing it to 39.6% for households earning over $1 million. However, per sources familiar with Harris’s thinking, she considers this rather high and potentially discouraging to investors. She has thus proposed a 28% long-term capital gains tax rate.
At the same time, Harris has proposed increasing the corporate tax rate to 28% from its current level of 21% established under the Trump administration's Tax Cuts and Jobs Act of 2017.
Advisers close to Harris have indicated that she supports allowing many of the Trump-era tax cuts to expire so they can be replaced by targeted programs designed to support families and small businesses.
“My vision of an opportunity economy is one where everyone can compete and have a real chance to succeed - where everyone, regardless of who they are, where they start, can build wealth, including intergenerational wealth,” Harris told her audience in New Hampshire. “I believe America’s small businesses are an essential foundation to our entire economy.”
Biden’s budget also includes other tax measures aimed at the wealthy. These include raising the top marginal income tax rate from 37% to 39.6% and introducing a 25% minimum income tax on households with a net worth exceeding $100 million.
Harris supports these measures—particularly the Billionaire Minimum Income Tax—despite previous attempts to pass similar taxes having failed in Congress. Notably, Biden’s proposal would be a major departure from current law as this minimum tax would apply to unrealized gains on assets.
Furthermore, Harris is also in favor of quadrupling the tax on stock buybacks—increasing it from 1% to 4%. This was introduced as part of the Inflation Reduction Act that Democrats passed through Congress in 2022.
Kamala Harris' moderate stance and populist initiatives
While Kamala Harris is trying to position herself as a moderate in certain areas of economic policy, she has also embraced populist measures such as a $25,000 credit for first-time homebuyers, a $6,000 child tax credit for newborns, and federal investigations into retail grocery pricing.
Democratic strategist James Carville noted in The New York Times that for Harris to establish herself as a forward-looking candidate, she would need to create some distance between her policies and those of Biden.
As part of her recent economic policy rollout, Harris has also proposed a substantial tax deduction for small businesses, increasing the deduction from $5,000 to $50,000. Furthermore, Harris has advocated for a federal ban on price gouging and a permanent expansion of the child tax credit, increasing it to $3,600 from the current $2,000.
Harris drew the ire of former president Donald Trump when she swiped his proposal to end the federal income tax on tips. However, these earnings would still be subject to payroll taxes under her plan, CNN reported.
