On a day when Vice President Kamala Harris unveiled a new plan for small businesses, the Democratic candidate also announced a change in her plans to pay for it by saying the long-term capital gains rate for the ultra-rich should be 28%.
This marks a split with President Joe Biden, who has proposed a rate roughly 10 percentage points higher than that for Americans making more than $1 million a year.
Harris’ shift in tax stance came after a wave of criticism from many business leaders of the Biden-Harris approach to capital gains, which is sometimes described as unworkable and punitive, and likely to stifle innovation.
Harris’ decision on Wednesday was announced in a speech in North Hampton, New Hampshire, and was part of a broader attempt by the Democratic nominee this week to bolster her credentials in the business world.
“My plan will make our tax code fairer while prioritizing investment and innovation,” Harris said in the North Hampton speech as she sought to outline an approach focused on fostering innovation and the long-term Biden-Harris priority of making the ultra-wealthy pay their “fair share.”
“We know that when government encourages investment, it leads to broad-based economic growth and creates jobs that strengthen our economy,” Harris added Wednesday.
Read more: Trump vs. Harris: 4 ways the next president could affect your bank accounts
Support for taxing the “unrealized” profits of the richest continues
But Harris on Wednesday also indirectly reaffirmed that she supports an even more controversial Biden idea: taxing the unrealized gains of the ultra-wealthy (unrealized gains are the growth in a person’s net worth that exists on paper but is still tied to an asset that hasn’t yet been sold).
“I support a minimum tax on billionaires,” Harris said again during the policy-focused speech at a quaint little business near Portsmouth, N.H.
The minimum tax on billionaires is a separate Biden plan that includes an effort to target households’ unrealized gains if their net worth exceeds $100 million.
It echoes calls from figures such as Democratic Senators Bernie Sanders and Elizabeth Warren for a “wealth tax” but with more limited effects. The plan has nonetheless faced a wave of criticism, especially over the question of how it would be implemented.
Donald Trump has focused particularly on the unrealized gains proposal, claiming the idea was “beyond socialism.”
Wednesday will focus on ordinary capital gains
But what Harris remained focused on Wednesday — in addition to a tenfold expansion of a key small-business tax credit and cutting red tape for them — were these regular capital gains taxes.
These are taxes paid when investors sell their stocks or other assets and then make a profit.
Currently, long-term capital gains are taxed at a 20% rate for the wealthiest Americans.
Biden had proposed that those capital gains — at least for households earning more than $1 million a year — be adjusted to the current top tax rate on wages. That rate is currently 37%, but could rise to 39.6% in 2026 if the Trump-era tax cuts are allowed to expire.
On Wednesday, Harris was clearly trying to find middle ground with her 28% proposal, saying, “We will tax capital gains at a rate that rewards investment in America’s innovators, founders, and small businesses.”
Also on Wednesday, Harris reaffirmed that she supports raising the federal corporate tax rate. A Harris aide previously told Yahoo Finance that she wants that rate raised from 21% to 28%. Donald Trump has talked about lowering that rate to 15%-20%.
In any case, Harris’s varied tax ideas could face an uphill battle in Congress, as many of these plans echo others that President Biden has been unsuccessfully pushing for years.
Those plans were not implemented even in 2021 and 2022, when Biden was in the White House and Democrats controlled both the House of Representatives and the Senate.
But even with this week’s push for a middle ground on capital gains, Harris also signaled Wednesday that she will maintain the focus on tax fairness that has been a hallmark of the Biden years.
“It’s not fair that those who can afford it the most often pay a lower tax rate than our teachers, nurses and firefighters,” Harris said Wednesday. “It’s not fair. It’s not fair.”
Ben Werschkul is Washington correspondent for Yahoo Finance.
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