Future
Harris’s Shift on Tax Cheers Her Corporate Backers
The vice president has proposed raising the levy on capital gains, a break from President Biden’s economic agenda, as she tries to keep big donors and progressives on side.
Vice President Kamala Harris moved toward the political center with her new tax proposals.Credit…Erin Schaff/The New York Times
Harris’s big business move
After weeks of largely sticking to President Biden’s economic agenda, Vice President Kamala Harris has made her first break in policy: scaling back a proposed increase of the capital gains tax.
The move’s actual economic effect may be minimal, experts say, but it shows how Harris is seeking to keep a wave of corporate backers on board without alienating her more progressive supporters.
Harris made an explicit pitch to the business community. At a speech in New Hampshire on Wednesday, she proposed raising the capital gains rate for Americans who make more than $1 million a year to 28 percent, far lower than the 39.6 percent that Biden has proposed. “We know when the government encourages investment, it leads to broad-based economic growth and it creates jobs,” Harris said.
She also introduced a plan to allow new companies to deduct up to $50,000 in start-up expenses, a tenfold increase over an existing tax break.
Those plans aren’t as transformative as they first seem. That taxpayer group would face an all-in cap gains rate of 33 percent under Harris’s plan, when factoring in a 5 percent investment income surtax on the wealthiest Americans. That compares with 44.6 percent under Biden’s, including the surtax. (The current total rate is 23.8 percent.)
And one expert told The Times that the start-up tax break would mostly benefit new companies that end up failing, since they wouldn’t have to wait 15 years to deduct all of their founding expenses.
