How a President Harris Would Tax the Wealthy
While the presidential candidate has supported proposals like a wealth tax, she is likely to hit stiff opposition.
Democratic presidential nominee Kamala Harris is “doubling down” on President Joe Biden’s tax platform, according to Jeff Bush of The Washington Update.
The vice president ”holds to Biden’s promise of not increasing taxes on filers earning less than $400,000,” and her goal, like that of Biden and most Democrats, “is to reflect the growing U.S. income and wealth inequality realities inside the tax code,” Bush told ThinkAdvisor in a recent email.
“In other words, increasing the progressivity of the U.S. tax code … ‘Making the wealthy pay their fair share,’” Bush said.
“Anxiety is rising” among wealthy Americans, according to Greg Valliere, chief U.S. policy strategist at AGF Investments, “that massive new taxes — including a ‘wealth tax’ — are likely” in a Harris administration.
However, “that’s not the consensus on Capitol Hill, where there simply aren’t enough votes for big new taxes,” Valliere said in his recent Capitol Insights newsletter.
“Proponents of huge new taxes on the wealthy and profitable corporations would need Harris to win, the Democrats to take both houses, and a likely Constitutional challenge on a wealth tax to succeed,” Valliere wrote.
Chances of “steep new taxes are very slim for one major reason — the Senate is likely to flip back to the Republicans, who are strongly opposed to major new taxes,” Valliere said. “We think there’s a 75% chance that the GOP will take the Senate, even if Harris wins the presidency.”
Harris’ Tax Plan
Harris supports “a minimum wealth tax of 25% (taxing unrealized gains and income) on those with a net worth” of more than $100 million and a minimum tax for those earning over $1 million per year, Bush said.
The Supreme Court “punted on deciding if taxing unrealized gains and income is constitutional in their last term,” Bush noted. “If this were to happen, they would inevitably be forced to resolve the issue.”
The Wall Street Journal reported Wednesday that Harris advisors have been discussing a top capital-gains tax rate of 28%, breaking with a plan President Biden outlined in his budget blueprint earlier this year.
Bush also noted that Harris’ plan curtails the stepped-up basis at death.
“She proposes a 39.6% highest marginal [income] tax rate,” he continued. “Recall the 3.8% ACA [net investment income] tax is on top of the 39.6%.”
As to the corporate tax rate, Harris ”suggested 28%,” with a 21% minimum, which Bush said “is also significant. At 28%, the U.S. corporate tax rate would be in the upper 2/3rds when compared to other developed economies.”
Harris “does not address the $10,000 [state and local tax deduction] cap, although, in the past, she has supported repealing it. But repealing it would blow a big hole in the revenue side of her plan,” according to Bush.
Harris proposed tax changes would be a net of $1 trillion to the Treasury over 10 years, Bush said, with $5 trillion of new revenue and $4 trillion “of tax cuts and transfers to lower-income filers. Her additional transfers primarily focus on enhanced child and newborn tax credits.”
Vice President Kamala Harris in the Eisenhower Executive Office Building in Washington on June 17. (Credit: Bloomberg)