Kamala Harris has proposed a smaller capital gains tax hike compared to President Biden’s plan, aiming to balance between promoting investment and addressing wealth inequality. This shift could reshape the tax debate ahead of the 2024 election.
Harris Proposes Lower Capital Gains Tax Hike Than Biden
In a divergence from President Joe Biden’s tax policy, Democratic presidential candidate Kamala Harris has suggested a more moderate increase in the capital gains tax for high earners. Speaking in New Hampshire, Harris stated she would raise the top total rate on individuals making over $1 million to 33%, which includes a 5% surcharge. This is significantly lower than Biden’s proposed 45% rate.
Encouraging Investment and Economic Growth
Harris emphasized that her tax plan is designed to reward investments in America’s innovators, founders, and small businesses. “When the government encourages investment, it leads to broad-based economic growth and it creates jobs, which makes our economy stronger,” she said during her campaign stop.
Comparison with Biden’s Tax Plan
Biden’s plan proposes a significant increase in capital gains taxes, treating them as ordinary income, with a top rate of 44.6%. He also advocates for increasing the marginal income tax rate to 39.6% from 37% and raising a surcharge on high earners to 5% from 3.8%.
Implications for the 2024 Tax Debate
Harris’ move is seen as a prelude to the upcoming debate on tax reform in 2024. Republicans are attempting to paint her as too far left, while progressives may be disappointed by her moderate stance. The future of tax policy will also be shaped by the expiration of major portions of the 2017 tax cuts passed under the Republican-led Congress.
Response from Democrats and Progressives
Although Harris’ proposal is seen as moderate compared to Biden’s, it remains to be seen whether this approach will garner broad support from Democrats. In 2021, a similar proposal to raise the capital gains rate to 28.3% failed to gain traction even when Democrats controlled both the White House and Congress.
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