Vice President Kamala Harris, the Democratic presidential nominee, wants to raise taxes on higher earners and corporations, her campaign announced Friday. But it’s not clear yet just how high. The plan was first announced by the New York Times.
The taxes would be needed to pay for Harris’s ambitious spending and economic proposals, which include a $25,000 down-payment subsidy for first-time home buyers, tax credits for real estate developers, a supersized $6,000 per-newborn tax credit and restoration of the $3,600 per-child pandemic-era tax credits. The Harris campaign also announced she wants to cancel Americans’ medical debt and expand government subsidies for Affordable Care Act plans that would save health insurance customers an average of $700 on their health insurance premiums.
The Harris campaign has not provided details about exactly how the VP would raise revenues for the spending plan, but her focus on subsidies comes as the economy continues to rank as the most pressing issue for voters heading into the election.
During her first term as a senator from California and her 2020 campaign for president, Harris proposed multiple changes to the tax code.
According to Tax Foundation senior analysts Erica York and Garrett Watson, writing in a recent blog, Harris has supported a number of changes to the tax code: “raising the top marginal income tax rate on the top 1% to 39.6%, implementing a 4% ‘income-based premium’ on households making more than $100,000 annually to pay for her version of ‘Medicare for All,’ [and] creating a $3,000 refundable tax credit ($6,000 for married couples filing jointly) for low- and middle-income taxpayers.”
Harris has also proposed lifting capital gains tax rates to the level of ordinary income tax rates, they wrote. And she has suggested increasing the estate tax, “though it is unclear if Harris would do so only on a subset of taxpayers,” York and Watson said.
Corporate taxes, meanwhile would have risen from 21% to 35% under Harris’s past proposals.
Advisors and investors are likely worry about what impact her presidency might have on the markets. Harris, say York and Watson, has floated a financial transaction tax on stock trades at 0.2%. Her past proposals have also been a 0.1% transaction tax on bond trades and a 0.002% tax on derivative transactions.
Harris, who has yet to do an interview, has backed off from some of her 2020 proposals, including Medicare for All and a ban on fracking. She still has not clarified how she would address the upcoming expirations of the 2017 Tax Cuts and Jobs Act and the unsustainable rise of the federal debt.
While the Republican nominee, former President Donald Trump, does support extending the 2017 tax cuts, he wants to pay for them through tariffs on China, something that Harris has said she does not support, the analysts noted. Trump's tariff proposal and some of Harris's spending plans are viewed as ilikely to rekindle nflation by many economists.
Harris’s campaign said she will not levy new taxes on those earning less than $400,000, a cornerstone of President Joe Biden’s tax policy. “While Harris has made supportive comments about the $400,000 pledge as running mate and vice president, her elevation to Democratic nominee is an opportunity to rethink the tax pledge,” York and Watson said.
But the pledge would limit Harris’s “available options to reform the tax code and raise offsets, as it limits tax increases to about 2% of the population. Second, the pledge increases the complexity of the tax code by requiring policy makers to design ideas around not increasing taxes on most households,” they said.
“Currently, key details of the pledge remain unanswered and inconsistent, such as the lack of adjustment for inflation—the pledge’s threshold would stand at about $481,000 today if indexed since 2020—and ambiguity about how the pledge applies to households with different filing statuses. Corporate tax increase proposals were arbitrarily excluded from the pledge, relying on a naive focus on statutory tax incidence (who directly pays the tax bill) over economic incidence (the corporate tax ultimately falls on workers and shareholders, many of whom earn less than $400,000),” the analysts noted.