Harris breaks with Biden on capital gains, calls for 28% top rate
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Vice President and Democratic presidential candidate Kamala Harris arrives at Portsmouth International Airport on Sept. 4. Photo: Joseph Priezioso/AFP via Getty Images
Vice President Kamala Harris wants to tax long term capital gains at 28% for wealthy Americans, calling for a top rate that's more than ten points lower than what President Biden has proposed.
Why it matters: Harris' new capital gains policy marks her clearest break yet with Biden as she fleshes out her policy positions as the Democrats' presidential nominee.
- Her goal is to convince voters that she has a plan to keep growing the economy while also addressing the high costs that are crushing many Americans.
- Biden has proposed taxing capital gains as regular income, taking the rate from 20% to 39.6% for Americans making more than $1 million a year.
- Biden also wants to increase a 3.8% Medicare surcharge for wealthy Americans to 5%, meaning that investment income would be taxed at an effective capital gains rate of 44.6%.
- Harris didn't indicate if she planned to keep the current 3.8% surcharge or increase it to 5%. Congress would have to approve all changes to the tax code.
Driving the news: Harris used a trip to New Hampshire — a state famed for its aversion to taxes — to unveil her new proposal and to flush out a plan to provide more tax deductions for small businesses.
- "We know that when the government encourages investment, it leads to broad-based economic growth," Harris said.
- She also touted her plan to increase the tax credit for starting a small business from $5,000 to 50,000.
- "America's small businesses are an essential foundation to our entire economy," she said. "They do trillions of dollars in business every year."
- "One of my highest priorities will be to strengthen America's small businesses," she said. "I want to see 25 million new small businesses by the end of my first term."
Between the lines: She also wants to rebut charges — and the "Comrade Kamala" name-calling — from the Trump campaign that she's not fully committed to American capitalism.
The big picture: Harris' new capital gains and small business proposals are part of the campaign's delicate balancing act on the economy.
- For the most part, she's defending President Biden's administration while also looking past it with new policies to help working- and middle-class Americans.
- While supporting most of Biden's economic proposals, she has emphasized different aspects of her agenda, including a plan to tackle "price gouging" by grocery stores and a bigger tax credit for first-time homebuyers.
- But her paid advertising focused more on how she'll lower costs than defending Biden's record on job creation.
Zoom in: On other parts of Biden's tax agenda, the Harris campaign has left little doubt that she's on the same page as Biden.
- On corporate taxes, she wants to raise the rate from 21% to 28%, the same rate Biden has proposed in his budgets.
- Like Biden, she supports a minimum tax for billionaires.
- "Billionaires and corporations must pay their fair share on taxes."
- And she wants to quadruple taxes on stock buybacks.
- The Wall Street Journal reported on Harris' plan to propose lower taxes than Biden earlier on Wednesday.
