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The Independent
What we know about Kamala Harris’s tax plans
By Alex Woodward,
1 day ago
Kamala Harris has pledged that strengthening America’s middle class will be a “defining goal” of her presidency, if elected.
In her keynote address at the Democratic National Convention, Harris envisioned what she called an “opportunity economy” anchored by a “middle class tax cut that will benefit more than 100 million Americans,” standing in stark contrast to Donald Trump ’s sweeping tax cuts that largely benefit America’s wealthiest households.
Harris has not yet rolled out a specific tax plan, though her campaign says she supports President Joe Biden’s latest budget, which aims to raise more than $5 trillion in taxes over a decade.
Under that plan, individuals making less than $400,000 a year would not see their taxes raised. Instead, Harris would target America’s wealthiest households and corporations — proposed changes that congressional Republicans have roundly rejected.
Here is what we know about Harris’s tax plans so far:
Higher taxes for wealthiest Americans and big boosts for middle-class families
Economic inequality in the US is the worst it’s been in more than four decades, according to a Pew Research Center analysis of government data.
Kamala Harris accepts the Democratic nomination for president on August 22 in Chicago, where she said support for middle class Americans will be a ‘defining goal’ of her presidency if elected. (AP)
In 1971, 61 percent of Americans lived in middle-class households. But by 2023, that share shrunk to 51 percent. Meanwhile, the share of Americans who live in lower-income households increased from 27 percent to 30 percent over that same time period, while the share in upper-income households also increased, from 11 percent to 19 percent.
Over more than four decades, only individuals within the high-wage income group have seen a significant hike in their incomes, while low-wage and middle-wage earners — people in the 10th and 40th-60th percentiles — saw the least amount of growth.
Under Biden’s tax plan, endorsed by Harris, the tax rate for individuals who earn more than $600,000 a year would see a tax rate jump from 37 percent to 39.6 percent.
Harris also supports expanding the child tax credit to provide $6,000 per child to families for the first year of a baby’s life.
The vice president’s plan could reduce the deficit by $1 trillion over a decade, according to estimates from the Committee for a Responsible Federal Budget.
Kamala Harris outlined her economic policy in a speech at the Hendrick Center for Automotive Excellence in Raleigh, North Carolina on August 16 (EPA)
She also endorsed raising a tax on stock buybacks from 1 percent to 4 percent, a proposal that was floated by Democratic members of Congress as part of the Inflation Reduction Act.
That legislation pushed for large companies to pay taxes worth at least 15 percent of the income that they report to investors in an effort to prevent companies from relying on dedications and tax credits to skirt their tax liabilities. Biden’s budget proposal also calls for increasing that minimum tax from 15 percent to 21 percent.
Back in 2020 , Biden campaigned on a plan to bring the capital gains tax rate for Americans earning $1 million a year from investment income to be more in line with the marginal rate on wages and salaries — which is currently at 37 percent — to effectively treat those earnings as income.
His latest budget proposal, which Harris has supported, would include a new tax on unrealized capital gains, and would only apply to individuals with at least $100 million in wealth who do not pay at least a 25 percent rate on their income.
Those $100 million earners would only pay taxes on unrealized capital gains if at least 80 percent of their wealth is in tradeable assets.
‘No tax on tips’
Both Trump and Harris have supported a “no tax on tips” platform, though Harris has also supported legislation to increase the federal hourly minimum wage , which has been stagnant at $7.25 for more than a decade despite higher living costs and inflation. The hourly minimum wage for tipped workers is even lower, at only $2.13.
She wants to impose a $75,000 annual income cap on her “no tax on tips” framework to prevent higher-income earners from trying to declare some of their income on tips to avoid paying taxes.
While Harris’s plan would exempt tips from federal income tax, tipped earnings would still be subject to payroll taxes, which fund Social Security and Medicare.
Donald Trump and Kamala Harris have both floated ‘no tax on tips’ platforms, though Harris wants to impose a $75,000 annual income cap to prevent higher-income earners from trying to declare some of their income on tips to avoid paying taxes (AFP via Getty Images)
Harris also wants to tie the policy to an increase in minimum wages. Harris has previously supported legislation to raise the hourly national minimum wage to $15. Trump, on the other hand, does not support increasing the federal minimum wage.
In a new ad, Trump’s voice falsely tells viewers that Harris supports “taxing service workers’ tips” and that Biden and Harris “have weaponized the IRS to confiscate your tip money.”
“Biden and Harris have literally unleashed the IRS to harass workers who receive tips,” he says.
The IRS reported in July that the agency has collected $1 billion in back taxes from about 1,500 tax-delinquent millionaires and billionaires.
The future of Trump’s tax cuts
While Trump aims to build on the legacy of his Tax Cuts and Jobs Act, which is set to expire in 2025, the former president has proposed another $5 trillion in tax breaks and spending while raising less than $3 trillion in revenue through across-the-board tariffs, which economists have warned could be disastrous for global trade.
The richest five percent of Americans would see 40 percent of the benefits from the law’s extension, “making this legislation one of the most regressive and expensive tax giveaways in history,” according to the Democratic-led Senate Finance Committee .
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