Vice President and Democratic presidential nominee Kamala Harris made waves on Wednesday by revealing a tax plan that significantly diverges from President Joe Biden’s previous proposals on capital gains tax. Harris’ announcement came during a campaign event in Portsmouth, New Hampshire, where she presented an expanded economic package aimed at promoting small business growth while taking a more moderated approach to taxing capital gains.
Speaking to supporters, Harris emphasized the importance of supporting investment in small businesses and innovation while ensuring that the wealthy pay their fair share. “And while we ensure that the wealthy and big corporations pay their fair share, we will tax capital gains at a rate that rewards investment in America’s innovators, founders, and small businesses,” Harris said. She proposed a 28 percent long-term capital gains tax for individuals making $1 million or more annually, which contrasts with Biden’s more ambitious plan to tax capital gains at a rate of 39.6 percent.
Harris’ proposal for a 28 percent tax rate on long-term capital gains marks a clear departure from Biden’s stance, but she remains committed to ensuring that billionaires and big corporations contribute fairly. A source close to Harris explained that she “believes a more moderated approach toward capital gains taxes will balance with other measures she supports to crack down on billionaires and big corporations.”
This move comes as Harris and former President Donald Trump prepare to face off in the upcoming presidential debate. While Trump has not yet detailed his capital gains tax plans for this election cycle, in 2016 he advocated for a 20 percent cap, and conservative groups like the Heritage Foundation have called for a 15 percent tax.
The contrast between Harris and Biden is seen as a significant shift in her economic platform. While Biden has pushed for a more progressive capital gains tax, Harris’ plan is intended to strike a balance that supports investment without overly burdening wealthy investors.
In addition to her capital gains proposal, Harris announced an ambitious plan to boost small business growth by offering a $50,000 tax benefit for new small businesses. This represents a tenfold expansion of an existing $5,000 deduction designed to offset startup costs. Harris pointed out that starting a small business can be prohibitively expensive for many Americans, with the average cost totaling $40,000. Her proposal would provide a much-needed financial cushion to help entrepreneurs get their businesses off the ground.
The new tax benefit would allow small businesses operating at a loss to delay using the $50,000 deduction until they turn a profit. Additionally, profitable businesses would have the flexibility to spread the deduction across multiple years, ensuring sustained financial relief in their early years of operation.
“We will have a particular focus on small businesses in rural communities, like right here in New Hampshire,” Harris told the crowd, further emphasizing her commitment to expanding opportunities in under-served areas. The plan also includes provisions for developing a standard deduction for small businesses, simplifying tax filing, and removing occupational licensing barriers that limit workers’ ability to move across state lines.
While Harris’ proposals to spur small business growth were generally well received, her shift on capital gains taxes has drawn criticism from progressive advocacy groups. The Patriotic Millionaires, an organization that advocates for progressive tax policies, voiced its disapproval of Harris’ decision to moderate the capital gains tax increase. “Vice President Harris is making a catastrophic mistake by capitulating to the petulant whining of the billionaire class,” said Morris Pearl, chair of the Patriotic Millionaires. “Both on the economics and on the politics, this is a serious unforced error.”
Harris’ decision to propose a more moderate capital gains tax rate has raised questions among her progressive base. Many feel that it signals a concession to Wall Street and wealthy investors, particularly after wealthy donors expressed concerns about the higher tax rates proposed by Biden.
At the same time, Harris’ plan remains significantly more progressive than that of her opponent, Trump, who has proposed extensive tax cuts for the wealthy and large corporations. Trump previously advocated for lowering the capital gains tax to 15 percent, a move that would overwhelmingly benefit the richest Americans.
A central component of Harris’ economic plan is her focus on supporting small businesses, particularly in rural areas and under-served communities. In addition to expanding the tax benefit for new businesses, Harris also proposed providing low- and no-interest loans to existing small businesses through community banks and financial institutions. These loans would help support business expansion in historically under-invested regions.
The Harris campaign circulated literature detailing plans for a fund that would enable community banks and Community Development Financial Institutions to cover interest costs as small businesses expand, focusing on helping rural communities and areas with limited access to capital.
As Harris prepares for her debate with Trump, her proposals offer a distinct vision for how she plans to approach economic policy if elected. Harris concluded her speech by saying, “We will not forget about the middle class or the innovators who make this country great.”
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