Harris goes her own way on capital gains tax hike

In a break with President Joe Biden, Democratic presidential candidate Kamala Harris called Wednesday for a smaller capital gains tax increase on the rich than he’s proposed.

Harris would hike the top total rate on people making more than $1 million to 33 percent, including a special 5 percent surcharge, well below the nearly 45 percent levy Biden has pitched.

“We will tax capital gains at a rate that rewards investments in America’s innovators, founders and small businesses,” she said at a campaign stop in New Hampshire.

“When the government encourages investment, it leads to broad-based economic growth and it creates jobs, which makes our economy stronger.”

Harris had previously endorsed Biden’s slate of tax increases, including his plan to nearly double the top long-term capital gains rate on the highest earners to 44.6 percent from 23.8 percent.

It’s one of nearly $2 trillion in tax increases Biden has proposed on the wealthy.

Her shift toward what her campaign considers a more “moderate” capital gains increase comes ahead of her first debate with former President Donald Trump, and as Republicans try to paint her as a creature of the extreme left.

It's also part of an effort to woo business owners, with Harris separately calling for start-up firms to be allowed to deduct more of their costs. She also proposed creating a type of standard deduction for businesses.

And it prefaces a major debate next year in Washington over the future of the tax code, when big chunks of Republicans’ 2017 tax cuts will expire, and taxing the rich will be a key issue.

Harris’ rethink of Biden’s plan may disappoint some progressives who have been anxious to more steeply hike taxes on capital gains, a key source of income for people at the very top of the income ladder. Capital gains frequently comprise more than half the income of those reporting making more than $10 million.

At the same time, though, Biden’s capital gains proposal likely goes well beyond what many congressional Democrats would be willing to support.

It's also possible that Harris’ plan may still be too much for some Democrats. In 2021, when Democrats controlled Congress and the White House, they considered increasing the capital gains tax rate to 28.3 percent before dropping the idea.

Biden has proposed requiring people making more than $1 million to pay taxes on capital gains — which include things like appreciation in the value of stocks — at ordinary income tax rates, instead of a special preferential rate. He has also proposed raising the top marginal income tax rate to 39.6 percent from 37 percent and increasing an investment surcharge on high earners to 5 percent from 3.8 percent.

Harris would hike the top base rate on capital gains to 28 percent, while keeping Biden’s increased investment add-on tax.

She backs Biden’s other proposals to increase levies on high earners and large companies.

“Billionaires and big corporations must pay their fair share,” Harris said Wednesday.