In a break with President Joe Biden, Democratic presidential candidate Kamala Harris on Wednesday called for a smaller capital gains tax increase for the rich than she proposed.
Harris said he would raise the cap to 33 percent for earners over $1 million, including a special 5 percent surcharge, well below the nearly 45 percent tax proposed by Biden.
“We will tax capital gains at a rate that rewards investment in America’s innovators, founders and small businesses,” he said at a campaign stop in New Hampshire.
“When the government encourages investment, it leads to broad-based economic growth and creates jobs, which strengthens our economy.”
Harris had previously supported Biden’s tax hikes, including his plan to raise the top level of long-term capital gains for top earners to 44.6 percent from 23.8 percent.
Biden wants to tax their capital gains, which include, for example, stock appreciation, at ordinary income tax rates instead of a special benefit rate. He has also proposed increasing the top marginal tax rate from 37% to 39.6% and increasing the surcharge on high income earners to 5% from 3.8%.
It’s one of nearly $2 trillion in tax increases Biden has proposed for the wealthy.
Harris’ move to what his campaign sees as a “moderate” increase in capital gains comes ahead of his first debate with former President Donald Trump, and as Republicans try to paint him as a far-left figure.
It will also lead to a wide-ranging debate in Washington next year about the future of the tax code, when large parts of the Republican tax cuts of 2017 expire and taxing the rich is a key issue.
Harris’ reconsideration of Biden’s plan may disappoint some progressives who have wanted to steeply raise taxes on capital gains, a key source of income for people at the top of the income ladder.
At the same time, however, Biden’s capital gains proposal is likely to go much further than many Democrats in Congress would be willing to support.
It’s also possible that Harris’ plan may still be too much for some Democrats. In 2021, when Democrats controlled Congress and the White House, they considered raising the capital gains tax rate to 28.3 percent before abandoning the idea.
