Now that Vice President Harris is the nominee of the Democratic Party for president, let’s ask the question: What would her tax-policy proposals look like? Details are quite sketchy as to what President Harris might propose because (as of this writing) she’s said next to nothing about it.
On August 16, the Harris campaign released a document setting forth the Harris plan “to bring down costs for American families.” It certainly is not a comprehensive tax plan. In fact, only the narrowest part of the plan addresses federal taxes, and it speaks only to expanding the child tax credit, expanding the earned income tax credit, creating a new child tax credit. She does not explain how these credits might be funded.
For this reason, we must look at her past proposals to gain insight into what she might push if she became president of the United States.
The central theme of Harris’s 2020 campaign was to increase taxes significantly, unraveling just about all of the cuts achieved under the Tax Cuts and Jobs Act (TCJA). Indeed, Harris voted against the TCJA as a U.S. senator (as did every other Democratic senator), and she often talked about outright repealing the law in its entirety.
In step with the Biden administration’s promise, she insists that any proposed tax increases and IRS-enforcement projects will not hit anyone making less than $400,000 a year. However, that is not what was on the table while she was campaigning to become the Democrats’ nominee in 2019 and early 2020.
Consider these proposals from her 2020 campaign:
(1) Increasing the top marginal income-tax rate from 37 percent to 39.6, where it was before the TCJA. While this might seem modest, it’s easy for me to believe that Harris could get behind proposals for a far more radical increase. For example, Congresswoman Alexandria Ocasio-Cortez once proposed pushing the top marginal rate to 70 percent to support her Green New Deal. Given Harris’s support for such radical environmental policies, she just might get behind such a move.
(2) Creating a new surtax of 4 percent, called an “income-based premium,” assessed on Americans making more than $100,000 a year. The tax would finance Harris’s “Medicare for All” plan. Such a tax was also put forth by both Senators Elizabeth Warren and Bernie Sanders, though Sanders’s plan called for the assessment on those making more than $29,000 a year. Harris argued that her tax proposal would not hit the middle class, because, apparently, you’re rich if you make more than $100,000 a year.
(3) Tying capital-gains-tax rates to ordinary income-tax rates for certain (unspecified) taxpayers. Under current law, capital gains are taxed at preferred rates that vary depending upon one’s ordinary income. In any case, however, capital-gains taxes are currently capped at 20 percent but are also subject to the 3.8 percent surtax on, among other things, net investment income. This pushes the top current potential assessment to 23.8 percent. If capital gains are taxed at ordinary income-tax rates, and if the highest rate is increased as suggested in point (1) above, capital gains will be subject to a potential total tax of 43.4 percent (39.6 + 3.8). This will most certainly have the effect of locking in capital gains. Lock-in occurs when investors simply opt not to sell appreciated assets and instead hold them, thus avoiding the higher tax on the appreciated value. This means government actually collects substantially less revenue than it otherwise would at lower tax rates.
(4) Creating a new “financial transactions tax” of 0.2 percent on all stock trades, and 0.1 percent on bond trades. This tax would be imposed on the trading activity of all investors, both individuals and institutional investors. And since about half the people in the U.S. have some kind of IRA or 401(k) retirement fund managed by institutional investors, there’s no way such a tax would avoid hitting middle-class Americans.
(5) An (unspecified) expansion of the estate tax. Under current law, the estate/gift tax kicks in for estates with a net value exceeding $12,920,000. The top marginal rate is 40 percent of the taxable estate in excess of $1 million. Harris’s 2020 proposal was to expand the tax to raise $315 billion specifically to increase teachers’ pay. There never were any details released on what such a plan might look like. However, the highest estate-tax rate in this century was 55 percent. I can easily imagine Harris pushing for a return to such a rate.
One question leading up to her nomination was whether Harris would support a wealth tax on the ultrarich. The far left in Congress (Sanders and Warren, for example), as well as the Biden administration, have certainly proposed such taxes in the past. Harris has now gotten behind her current boss’s plan, floating a wealth tax of 25 percent on unrealized capital gains for those with more than $100 million of net worth.
Harris also came out in favor of a “carbon tax.” Such a tax would likely make every product and service in America more expensive as the federal government taxes fossil-fuel products solely for the purpose of discouraging their use. Most certainly, such a tax would lay the axe to the idea that her tax-increase proposals would hit only those making more than $400,000 per year.
It is abundantly clear that Harris’s tax philosophy, like that of the far left generally, is less about raising money to fund the legitimate functions of government and more about using the power of taxation to change behavior. By imposing additional burdens on one segment of the economy (fossil fuels, for example), and granting tax-favored status to another segment of the economy (renewable energy, for example), the government deliberately throws its weight and power behind the latter at the expense of the former. This is most certainly an illegitimate use of the taxing power of the federal government.
Consumers alone should have the power to pick winners and losers in the marketplace when it comes to lawful products and services. Never should such decisions be made by politicians, and certainly not by unelected bureaucrats. The more power is transferred to the government to make decisions in the marketplace, the less freedom individuals have to buy and sell. That naturally and unavoidably drags us closer to a socialist economic system. Such a system is most certainly not at the core of America’s founding principles, which Harris purports to champion. (For more from the author of “How Radical Will Kamala Harris’s Tax Policy Be? Look to Her Past” please click HERE)
