WASHINGTON—Vice President Kamala Harris on Sept. 4 proposed a new tax rate on capital gains at 28 percent, which is higher than the existing level but lower than President Joe Biden’s 2025 budget proposal that she previously endorsed.
Harris’s plan represents a departure from Biden’s budget proposal, which would raise the capital gains tax on individuals earning more than $1 million to 44.6 percent.
The announcement was made days before Harris’s Sept. 10 debate with former President Donald Trump, who has cast his Democrat opponent’s economic plans as being bad for businesses.
Currently, long-term capital gains are taxed at a maximum of 20 percent, and high earners may be subject to an additional 3.8 percent net investment income tax, potentially raising the maximum tax rate on long-term capital gains to 23.8 percent.
“If you earn a million dollars a year or more, the tax rate on your long-term capital gains will be 28 percent under my plan,” Harris said, speaking at a campaign event in New Hampshire.
“We will tax capital gains at a rate that rewards investment in America’s innovators, founders, and small businesses.”
It’s unclear whether the 28 percent figure that Harris has referenced constitutes the maximum tax rate, inclusive of other provisions, such as the net investment income tax.
Under Biden’s budget proposal, a separate plan to increase the net investment income tax (NIIT) rate to 5 percent contributed to the overall 44.6 percent capital gains rate.
If the same NIIT increase were applied to Harris’s proposal, the capital gains tax would jump to 33 percent.
Harris’s remarks were delivered at Throwback Brewery in North Hampton, New Hampshire, where she also unveiled other economic policy proposals, including an increase in the tax deduction for startup costs from $5,000 to $50,000.
Trump, has targeted the Democratic nominee’s economic policies as too left-wing.
“The Harris–Walz tax plan calls for the largest tax hike in history, including a higher income tax, higher business taxes, higher investment taxes, an unrealized gains tax, and an expanded death tax—among others—all of which will hurt small businesses and their customers,” Trump’s campaign wrote in a statement to The Epoch Times.
In the 2020 election, Trump promised to lower the top capital gains tax rate to 15 percent.
In 2024, he has not announced any capital gains tax proposal.
The Epoch Times has reached out to the campaign for further comment.
Some tax watchdogs have criticized Harris’s capital gains tax proposals, saying they will reduce investments that small businesses rely upon to create jobs.
“Under the Harris plan, the combined federal-state capital gains tax exceeds 50 percent in many states. California will face a combined federal-state rate of 57.8 percent, New Jersey 55.3 percent, Oregon at 54.5 percent, Minnesota at 54.4 percent, and New York state at 53.4 percent.”
These types of changes also pose risks to capital markets, according to some experts.
“U.S. benefits from having some of the most robust and deep capital markets in the world,” Garrett Watson, a senior policy analyst at The Tax Foundation told The Epoch Times.
“We need to be careful about unprecedented, untested policy changes that could compromise that or weaken that source of capital,” Watson noted, referring to Harris’s remarks and other proposals, such as the taxing of unrealized capital gains, advocated by Harris and Biden.
