Harris announces rare break with Biden’s capital gains tax rate

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

Harris has called for a 28% capital gains tax rate for Americans earning at least $1 million, lower than Biden’s proposed top rate of 39.6% on capital gains – the profits an investor makes from selling assets such as stocks or real estate.

“While we ensure the wealthy and large corporations pay their fair share, we will tax capital gains at a rate that rewards investment in American innovators, founders and small businesses,” Harris said.

More: Harris to Propose $50K in Small Business Tax Credit as Part of Economic Plan

During a campaign speech at the Throwback Brewery in North Hampton, New Hampshire, Harris announced a proposal for a more favorable capital gains system for businesses.

“We know that when government encourages investment, it leads to broad-based economic growth and creates jobs, which strengthens our economy,” Harris said during a speech in which she also unveiled other tax relief measures that her campaign says are designed to spur growth among small businesses.

The Wall Street Journal was the first to report on the capital gains tax plan. The current rate is 23.8%, which includes a flat rate of 20% plus 3.8% on investment income.

With the presidential campaign now six weeks old, Harris has taken a populist approach to taxes, like Biden, attacking Republican candidate Donald Trump for supporting tax cuts for the wealthiest Americans and corporations.

When Biden unveiled his budget in March, the president argued that wealthy households earning more than $1 million should pay the same marginal rate of 39.6 percent on their income that highly paid workers pay on their wages.

However, a person familiar with Harris’ proposal said the vice president believes a lower capital gains tax would provide “even greater incentives for investment and access to capital for small businesses under her Democratic presidency — offering a more moderate Democratic approach to the issue.”

More: Kamala Harris Addresses Diversion, Attacks Trump in CNN Interview with Walz

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

But Harris’ capital gains tax rate proposal doesn’t stray from a more controversial part of Biden’s budget that covers so-called unrealized capital gains. Biden has proposed a new 25% tax on Americans’ investment gains of at least $100 million, even if the assets aren’t sold.

In her New Hampshire campaign speech, Harris reiterated her support for a new minimum tax on 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 outlined plans to support business incubators, eliminate “red tape” that has been a barrier to small businesses starting up — like the time it takes to file a tax return — and expand the tax deduction for startup business expenses from $5,000 to $50,000.

“It’s basically a tax cut for people starting small businesses,” Harris said.

Harris accused Trump of planning to “cut” a federal small business lending program and supporting tax cuts for billionaires and corporations that would increase the national debt by more than $5 trillion.

“We can count,” Harris said.

In outlining her economic agenda, Harris relied heavily on Biden administration proposals, promising to expand tax credits for families with children and other deductions for working families.

Harris said last month she would enact a federal ban on price gouging on food and groceries, cap prescription drug costs at $2,000 a year and insulin at $35 a month. She also proposed expanding several existing tax breaks for middle-class Americans and providing $25,000 in down payment assistance for first-time homebuyers.

Contact Joey Garrison at X, formerly on Twitter, @joeygarrison.

This article originally appeared on USA TODAY: Harris proposes rare break with Biden’s capital gains tax rate