Vice President Kamala Harris on Wednesday distinguished herself from President Biden on tax policy, marking the first major issue where she has publicly diverged from the administration she is part of.
At a campaign event in North Hampton, New Hampshire, Harris proposed a lower capital gains tax rate than Biden's plan. Her new proposal reportedly reflects the influence of her campaign's top donors, who encouraged her to moderate some of her previous tax positions.
By positioning herself as a more business-friendly candidate, Harris seeks to attract support from Wall Street and Silicon Valley , incorporating business-centric language and policies into her platform, as reported by The New York Times. Harris, a former California senator, previously represented Silicon Valley in Congress.
New tax break for start-ups
In addition to her revised stance on capital gains tax, Harris introduced a significant new tax break for start-ups. Her proposal would increase the allowable deduction for startup expenses from $5,000 to $50,000. Harris described it as “essentially a tax cut for starting a small business,” allowing new businesses to spread the deduction over multiple years or claim it in full once they are profitable. She also plans to simplify tax filing for businesses, comparing it to the ease of standard deductions for individuals.
Under Biden’s current proposal, capital gains for those earning over $1 million would be taxed at 39.6%. Harris's plan suggests a lower 28% tax rate for the same group, marking a shift from her earlier support for Biden’s tax increases.
How many businesses could this impact?
Harris is aiming to attract 25 million new small business applications in her first term if elected president. President Joe Biden ’s administration announced Tuesday there have been 19 million new small business applications since the start of the president’s term.
No additional surtax on investment income
Harris's plan doesn’t include an additional surtax on investment income. Sources close to her campaign said that a 5% surtax could still apply, making the effective rate 33%, compared to Biden's total of 44.6% with the surtax, according to a The New York Times report. Currently, the top capital gains tax rate is 23.8%, including a 3.8% surtax.
“My plan will make the tax code more fair while prioritising investment and innovation,” she said. “Billionaires and big corporations must pay their fair share in taxes.”
Current small business tax deduction
Currently, small businesses can use a $5,000 deduction for startup expenses and amortize remaining costs over 15 years, according to The Wall Street Journal. Eligible startup costs include advertisements, employee training, consultant and executive salaries, and travel expenses related to securing customers and suppliers, as outlined by the IRS.
Potential impact on new businesses
Harris aims to attract 25 million new small business applications during her first term if elected. This goal contrasts with President Biden’s administration's announcement that 19 million new small business applications have been filed since Biden took office.
Broader economic plans
Harris’s economic agenda includes an “opportunity economy” focus on supporting the middle class. Besides the new startup deduction, she plans to expand the child tax credit to $6,000 for newborns up to one year old and $3,600 per child for middle- and lower-income families. Additionally, she proposes tax cuts for the middle class, measures to combat “price gouging” at grocery stores, and up to $25,000 in down payment assistance for first-time homebuyers.
'A fight for something, not against something'
Harris's new proposals come ahead of her scheduled debate with former President Donald Trump. In distancing herself from Biden's campaign rhetoric, Harris frames her approach as a positive agenda rather than merely opposing Trump. “When we talk about fighting, it’s a fight for something, not against something,” she emphasized.
Key background
Harris's tax proposal also contrasts with Trump’s plan to extend expiring tax cuts for all income levels, including a 20% deduction for businesses. Harris currently holds a lead over Trump in several polls following the Democratic National Convention, including a four-point advantage among registered voters in an Ipsos/ABC News poll taken between Aug. 23-27.
Biden’s tax proposals, meanwhile, have faced skepticism on Capitol Hill, affecting their likelihood of becoming law.
At a campaign event in North Hampton, New Hampshire, Harris proposed a lower capital gains tax rate than Biden's plan. Her new proposal reportedly reflects the influence of her campaign's top donors, who encouraged her to moderate some of her previous tax positions.
By positioning herself as a more business-friendly candidate, Harris seeks to attract support from Wall Street and Silicon Valley , incorporating business-centric language and policies into her platform, as reported by The New York Times. Harris, a former California senator, previously represented Silicon Valley in Congress.
New tax break for start-ups
In addition to her revised stance on capital gains tax, Harris introduced a significant new tax break for start-ups. Her proposal would increase the allowable deduction for startup expenses from $5,000 to $50,000. Harris described it as “essentially a tax cut for starting a small business,” allowing new businesses to spread the deduction over multiple years or claim it in full once they are profitable. She also plans to simplify tax filing for businesses, comparing it to the ease of standard deductions for individuals.
Under Biden’s current proposal, capital gains for those earning over $1 million would be taxed at 39.6%. Harris's plan suggests a lower 28% tax rate for the same group, marking a shift from her earlier support for Biden’s tax increases.
How many businesses could this impact?
Harris is aiming to attract 25 million new small business applications in her first term if elected president. President Joe Biden ’s administration announced Tuesday there have been 19 million new small business applications since the start of the president’s term.
No additional surtax on investment income
Harris's plan doesn’t include an additional surtax on investment income. Sources close to her campaign said that a 5% surtax could still apply, making the effective rate 33%, compared to Biden's total of 44.6% with the surtax, according to a The New York Times report. Currently, the top capital gains tax rate is 23.8%, including a 3.8% surtax.
“My plan will make the tax code more fair while prioritising investment and innovation,” she said. “Billionaires and big corporations must pay their fair share in taxes.”
Current small business tax deduction
Currently, small businesses can use a $5,000 deduction for startup expenses and amortize remaining costs over 15 years, according to The Wall Street Journal. Eligible startup costs include advertisements, employee training, consultant and executive salaries, and travel expenses related to securing customers and suppliers, as outlined by the IRS.
Potential impact on new businesses
Harris aims to attract 25 million new small business applications during her first term if elected. This goal contrasts with President Biden’s administration's announcement that 19 million new small business applications have been filed since Biden took office.
Broader economic plans
Harris’s economic agenda includes an “opportunity economy” focus on supporting the middle class. Besides the new startup deduction, she plans to expand the child tax credit to $6,000 for newborns up to one year old and $3,600 per child for middle- and lower-income families. Additionally, she proposes tax cuts for the middle class, measures to combat “price gouging” at grocery stores, and up to $25,000 in down payment assistance for first-time homebuyers.
'A fight for something, not against something'
Harris's new proposals come ahead of her scheduled debate with former President Donald Trump. In distancing herself from Biden's campaign rhetoric, Harris frames her approach as a positive agenda rather than merely opposing Trump. “When we talk about fighting, it’s a fight for something, not against something,” she emphasized.
Key background
Harris's tax proposal also contrasts with Trump’s plan to extend expiring tax cuts for all income levels, including a 20% deduction for businesses. Harris currently holds a lead over Trump in several polls following the Democratic National Convention, including a four-point advantage among registered voters in an Ipsos/ABC News poll taken between Aug. 23-27.
Biden’s tax proposals, meanwhile, have faced skepticism on Capitol Hill, affecting their likelihood of becoming law.
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