Harris announces rare policy break with Biden on capital-gains tax rate

WASHINGTON — Democratic presidential nominee Kamala Harris on Wednesday proposed a more modest increase to the capital-gains tax rate than President Joe Biden unveiled in his budget earlier this year, marking one of the vice president's biggest policy departures from the outgoing president.

Harris called for a 28% capital-gains tax rate for Americans who earn at least $1 million, lower than Biden's proposed 39.6% top rate on capital gains − the profits an investor makes from selling an asset such as stocks or real estate.

"While we ensure that the wealthy and big corporations pay their fair share, we will tax capital gains at a rate that rewards investment in America's innovators, founders and small businesses," Harris said.

More: Harris to propose $50K tax break for small business in economic plan

Harris announced the more business-friendly capital gains proposal during a campaign speech at the Throwback Brewery in North Hampton, New Hampshire.

"We know when the government encourages investment, it leads to broad-based economic growth and it creates jobs, which makes our economy stronger," Harris said during the remarks where she also unveiled other tax-relief measures her campaign says are aimed at spurring growth among small businesses.

The Wall Street Journal first reported on the capital-gains tax plan. Currently, the rate is 23.8%, which includes a 20% flat rate plus a 3.8% on investment income.

In her now six-week-old campaign for president, Harris − like Biden − has taken a populist approach on taxes by attacking Republican nominee Donald Trump for supporting tax cuts for the wealthiest Americans and corporations.

When Biden unveiled his budget in March, the president argued wealthy households making more than $1 million should pay the same 39.6 percent marginal rate on their income just like a high-paid worker pays on their wages.

But a person familiar with Harris' proposal said the vice president believes a lower capital gains tax will provide "an even greater incentive for investment and access to capital for small businesses under her Democratic presidency – offering a more moderate Democratic approach to this issue."

More: Kamala Harris addresses flip-flopping, takes on Trump in CNN interview with Walz

The move comes after the New York Times last week reported major donors to the Harris campaign from Wall Street to Silicon Valley were urging her to reconsider tax increases in Biden's budget targeting the wealthiest Americans. The Times reported a group of 100 venture capitalists who support Harris polled its members and that most agreed “taxing unrealized capital gains will stifle innovation."

However, Harris' capital-gains tax rate proposal does not break from a more controversial part of Biden's budget involving so-called unrealized capital gains. Biden proposed a new 25% tax on investment gains of Americans worth at least $100 million even if the assets have not been sold.

Harris reiterated in her campaign speech in New Hampshire that she supports a new minimum tax for billionaires and forcing corporations to "pay their fair share" by raising the corporate tax rate.

Harris also outlined a goal of generating 25 million new small business applications by the end of her potential first term in January 2029. She unveiled plans to support business incubators, eliminating "red tape" that present hurdles for small business to open − like the time it takes to file taxes − and expanding tax deductions for startup business expenses from $5,000 to $50,000.

"It's essentially a tax cut for starting a small business," Harris said.

Harris accused Trump of planning to "cut off" federal program that give loans to small business and supporting tax cuts for billionaires and corporations that would add more than $5 trillion to the national debt.

"We know how to count," Harris said.

In laying out her economic agenda, Harris has mostly built on the Biden administration's proposals, pledging to increase tax credits for families with children and other deductions for working families.

Harris said last month that she would put a federal ban on price gouging of food and groceries, cap prescription drug costs at $2,000 annually and insulin at $35 a month. She also proposed an expansion of several existing tax credits for middle class Americans and $25,000 in down payment assistance for first-time homebuyers.

Reach Joey Garrison on X, formerly Twitter, @joeygarrison.

This article originally appeared on USA TODAY: Harris announces rare policy break with Biden on capital-gains tax rate