Kamala Harris Unveils $5 Trillion Tax Plan: Key Details and Implications
Vice President Kamala Harris has recently presented her most comprehensive policy proposal to date: a substantial $5 trillion in tax increases projected over the next decade. This initiative aligns closely with the tax proposals put forth by the Biden administration earlier this year.
The core of Harris’s plan focuses on significantly raising taxes for the wealthiest Americans and large corporations, with no impact on individuals earning less than $400,000 annually. The proposed increases reflect President Biden’s earlier budget suggestions, which Harris has publicly endorsed.
One major component of the plan involves elevating the corporate tax rate from 21% to 28%, a move anticipated to generate approximately $1.3 trillion over ten years. Additionally, Harris supports increasing the tax on stock buybacks from 1% to 4%, a measure first introduced in the Inflation Reduction Act of 2022. This plan also includes raising the minimum tax for large corporations from 15% to 21%, aimed at ensuring that companies cannot exploit deductions and credits to minimize their tax liabilities.
Harris’s proposal extends to the taxation of multinational corporations, advocating for a more rigorous global minimum tax. This would be implemented based on income generated in individual countries rather than global profits, with the rate doubling from 10.5% to 21%.
For high-income Americans, the plan proposes raising the top marginal income tax rate from 37% to 39.6%. Moreover, the rate for Medicare surtaxes would increase from 3.8% to 5% for those earning over $400,000, leading to a potential top marginal rate of 44.6%. Investment earnings for individuals making over $1 million annually would be taxed at ordinary income rates, rather than the lower capital gains rates.
A significant shift in the taxation of inherited assets is also proposed. Harris supports taxing unrealized capital gains at the time of an asset owner’s death, though with exemptions for surviving spouses. Additionally, a new tax would require individuals with wealth exceeding $100 million to pay at least 25% on their combined income and unrealized capital gains.
Despite these detailed proposals, several issues remain unresolved. The White House budget does not fully address how to handle the expiration of key provisions from the Tax Cuts and Jobs Act, which could affect tax rates and deductions for many Americans. Harris’s plan also must contend with additional costs, including her proposed tax cuts and spending initiatives, such as a more generous child tax credit and the potential restoration of the state and local tax deduction.
As the tax landscape remains a critical issue in the upcoming presidential election, the full impact of Harris’s $5 trillion tax plan will become clearer as negotiations and discussions progress in Washington.