Vice President Kamala Harris' tax proposals for the 2024 election are coming into focus, building on the unfinished business of the Biden administration. The plan aims to increase taxes on corporations and high-income households while leaving most Americans' taxes unchanged or lower, according to reporting by The Wall Street Journal.
Harris' proposed tax changes would increase taxes by approximately $5 trillion over the next decade, while cutting other taxes by more than $4 trillion. The overall federal government collections, projected at $63 trillion over 10 years, would remain largely unchanged. However, the Harris agenda would significantly shift the tax burden among different income groups.
Under the plan, some high-income households would face sharp tax increases, with top marginal tax rates reaching their highest point since 1986. Wealthy investors and company founders would encounter substantial capital gains tax bills that they currently do not face under existing law.
The Harris campaign has endorsed President Joe Biden's proposed tax increases from his most recent budget. This includes raising the top marginal income tax rate for individuals to 44.6% across almost all income types, compared to current lower top rates of 23.8% on capital gains, 29.6% on some business income, and 40.8% on wages.
HARRIS: "Under my plan, more than 100 million Americans will get a tax cut, and we will do this by restoring two tax cuts designed to help middle class and working Americans: The earned income tax credit and the child tax credit. ...and we will do this while reducing the deficit" pic.twitter.com/5Ky074fcDI
— JM Rieger (@RiegerReport) August 16, 2024
A novel system would be created to tax unrealized capital gains of individuals with a net worth exceeding $100 million. This proposal, which affects about 0.01% of households, would implement an annual minimum tax of 25% on their income, using a broader definition that includes unrealized gains.
For corporations, the tax rate would increase from 21% to 28%, and large companies would face a 21% minimum tax instead of the current 15%. Higher taxes on foreign profits are also proposed.
Despite these increases, Harris has promised to prevent any tax hikes on households making under $400,000, effectively extending most of the expiring Trump tax cuts. She has also proposed additional tax cuts, including reviving the expanded child tax credit from 2021 and adding a new tier for newborns with a $6,000 tax credit.
"Instead of a Trump tax hike, we will pass a middle-class tax cut that will benefit more than 100 million Americans," Harris stated at the Democratic National Convention in Chicago.
The plan also includes reviving an expanded version of the earned-income tax credit for low-income families, continuing larger tax-credit subsidies for health, and exempting some tips from taxation.
However, some aspects of Harris' plan remain unclear, such as her stance on the $10,000 cap on state and local tax deductions and the estate tax exemption. These issues could prove contentious within the Democratic Party if they gain full control of Congress and the White House.
The implementation of Harris' tax plan would depend heavily on the outcome of the 2024 election and the composition of Congress. Even with Democratic control, intraparty disagreements and slim vote margins could prevent the full agenda from becoming law.
