After receiving a significant backlash over the endorsement of President Joe Biden’s capital gains tax, Vice President Kamala Harris decided to take a more lenient stance, proposing 28% instead of the previously envisioned 39.6%.
This move probably comes after data showed that former President Donald Trump’s approach to the economy was more liked among voters at 43%, compared to Harris’ rating of 40%, according to a Reuters/Ipsos poll on August 27.
During her speech in New Hampshire on September 4, she proposed increasing the current corporate tax rate from 21% to 28%, believing this rate would motivate investors to allocate more money to startups and small businesses.
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“We will tax capital gains in a way that benefits America’s innovators, founders, and small businesses,” Harris said during her rally speech.
Harris still supports other tax hikes
The Democratic presidential candidate still supports measures such as increasing the top marginal income tax rate to 39.6% from the previous 37% established during the Trump administration and imposing a 25% minimum income tax on households earning more than $100 million.
In addition, the Vice President favors increasing the current tax on corporate stock buybacks from 1% to 4%.
Proposed tax rate hikes already face stark opposition
If passed, the revised tax proposals would still face an uphill battle through the U.S. Congress.
Additionally, several economic advisors and U.S. politicians have come out in opposition to the proposal.
On August 28, in an interview with CNBC‘s “Squawk Box,” Harris’ economic advisor, Bharat Ramamurti, received stark opposition from the show’s hosts, who called the proposed unrealized gains tax “unconstitutional” and “unfair.”
In an interview at the same show on September 4, Democratic Congressman from California, Ro Khanna, said that taxing unrealized gains could force entrepreneurs to sell their companies prematurely, which could lead to negative economic consequences, such as the consolidation of startups under larger private equity firms
Harris also proposed several economic incentives
To present herself as a more economic-friendly candidate, Harris proposed a series of economic incentives that would aid the working class in the U.S.
One of her first proposals is to reduce the tax on small businesses from $50,000 to $5,000, a tenfold decrease.
Furthermore, she promised to enact a federal ban on price gouging, which would lower the price of groceries and everyday costs for ordinary Americans.
One of her additional proposals is to expand the current child tax credit from $2,000 to $3,600 per year, paid in monthly installments.
All these incentives and a softer stance on capital gains tax are envisioned as presenting Harris as a more favorable-looking candidate and to woo more support from higher-earning individuals.
