A new proposal by Democrat Presidential Nominee Kamala Harris to set the nation’s capital gains tax rate at 28% has temporarily replaced abortion, the Middle East, and border security as a hot-button campaign topic.
The Vice President made that suggestion during a campaign stop in New Hampshire during which she remarked that her vision of what she called an “opportunity economy,” is one in which “everyone can compete and have a real chance to succeed, where everyone, regardless of who they are, where they start, can build wealth, including intergenerational wealth.”
The 28% rate would be an increase over the current 20%, along with an additional 3% for higher earners. But it is substantially lower than the figure earlier proposed by President Biden in his 2025 budget, which called for top capital gains rate of 44.6%.
“The so-called billionaire minimum tax would take the tax code in the wrong direction by imposing a complicated tax on a narrow segment of high-earning taxpayers in a way that’s never been tried,” writes tax experts Garrett Watson and Erica York in an essay published by the Washington-based Tax Foundation.
Ultimately, contend Watson and York, the Harris proposal would “add new compliance burdens for taxpayers and administrative challenges for the IRS, while weakening the US economy by raising the tax burden on saving and entrepreneurialship.”
An entirely different perspective is offered by New York Magazine’s financial reporter Kevin Dugan, who suggests that the 28% would not be nearly high enough to seriously address the question of wealth inequality.
“Capital gains taxes are lower than income taxes and apply to investments, making them so attractive for wealthy people whose net worth is largely tied up in stocks, bonds, and other assets,” notes Dugan.
Dugan adds that both Presidents Reagan and Obama called for a 28% capital gains rate, and that by not calling for a higher rate, Harris is “bringing back the status quo that exacerbated the problem in the first place.”
Back and forth: billionaire investor Mark Cuban announced on the platform X that the Harris proposal is “evidence that Kamala Harris is listening to businesspeople and getting their feedback on what’s fair and what will lead to more investment in business.”
But, according to the New York Times, Morris Pearl, chairman of the group Patriotic Millionaires, said Harris was “making a catastrophic mistake by capitulating to the petulant whining of the billionaire class.”
One way or the other, while the Harris proposal has become a heated early September talking point, notes the publication Politico, “it prefaces a major debate next year in Washington over the future of the tax code.”
That debate will come when large portions of former President Trump’s 2017 tax cuts are set to expire, and “taxing the rich will be a key issue.”
By Garry Boulard
Image Credit: Courtesy of The White House
