On a day filled with economic policy announcements, Vice President Kamala Harris unveiled a new plan aimed at supporting small businesses, while also making a significant adjustment to how she proposes to fund it. Harris announced that she plans to set the long-term capital gains tax rate for the ultra-wealthy at 28%, marking a shift from President Joe Biden’s previously suggested rate, which was nearly 10 percentage points higher for Americans earning over $1 million annually.
This move highlights a departure from Biden’s approach and comes after mounting criticism from business leaders who labeled the Biden-Harris capital gains proposal as too punitive and potentially stifling to innovation. Harris made the announcement during a speech in North Hampton, New Hampshire, where she outlined her plans to foster business growth while ensuring the wealthiest Americans contribute their fair share.
“My plan will make our tax code more fair while also prioritizing investment and innovation,” Harris said. She emphasized the importance of promoting long-term investments and how these initiatives can fuel economic growth, create jobs, and strengthen the economy. Harris is seeking to strike a balance between encouraging innovation and ensuring that high-net-worth individuals contribute more to the nation’s tax base.
A Shift in the Capital Gains Debate
The proposed 28% capital gains tax is a clear attempt by Harris to position herself as more business-friendly while maintaining the core Democratic goal of making the tax system more equitable. Long-term capital gains are currently taxed at 20% for the wealthiest Americans. Biden had previously proposed aligning the capital gains rate for households earning over $1 million with the top income tax rate of 37%, a rate that could increase to 39.6% in 2026 if Trump-era tax cuts expire. Harris’s plan, with its lower 28% figure, seeks a middle ground that both supports investment and ensures fairness.
“We will tax capital gains at a rate that rewards investment in America’s innovators, founders, and small businesses,” Harris stated, positioning her plan as a pro-growth strategy that won’t hinder entrepreneurship or economic expansion.
Taxing Unrealized Gains and the Ultra-Wealthy
In addition to her capital gains proposal, Harris also reaffirmed her support for a controversial aspect of Biden’s tax agenda: taxing unrealized gains for the ultra-wealthy. Unrealized gains refer to the increase in the value of assets, such as stocks, that have not yet been sold. These “paper profits” have long been a topic of debate, with critics questioning the feasibility and fairness of taxing wealth that hasn’t been realized in cash.
“I support a billionaire minimum tax,” Harris reiterated during her speech at a small business in Portsmouth, New Hampshire. This billionaire minimum tax is part of a broader Biden plan targeting households with a net worth exceeding $100 million. While this proposal echoes calls from progressive figures like Senators Bernie Sanders and Elizabeth Warren for a “wealth tax,” it is more narrowly focused and has faced significant pushback from critics who argue that it could be difficult to implement effectively.
Donald Trump has been a vocal critic of taxing unrealized gains, going as far as to label the idea as “beyond socialism.” Nonetheless, Harris remains committed to pursuing tax reforms that ensure the wealthiest Americans pay their fair share.
A Focus on Capital Gains and Small Business Support
While the debate over unrealized gains continues, Harris’s speech also focused on more conventional capital gains taxes. These taxes are paid when investors sell stocks or other assets and reap profits. Harris’s 28% proposal is designed to be more moderate than Biden’s initial plan while still ensuring the ultra-rich contribute a larger portion of their wealth.
In addition to addressing capital gains, Harris also outlined other key elements of her small business plan. These include a tenfold expansion of a critical small business tax credit and efforts to reduce red tape for entrepreneurs, making it easier for them to start and grow their businesses.
Corporate Tax Rates and Legislative Hurdles
In a further commitment to reforming the tax system, Harris reiterated her support for increasing the federal corporate tax rate from 21% to 28%. This is in contrast to former President Donald Trump’s suggestion of lowering the corporate tax rate to 15%-20%, a move he believes would stimulate business investment.
Despite Harris’s ambitious tax proposals, they are likely to face significant challenges in Congress. Many of these ideas, including raising capital gains taxes and the corporate tax rate, were part of Biden’s agenda, which failed to pass even when Democrats held both chambers of Congress in 2021 and 2022. With a divided political landscape, Harris’s push for these reforms will require building bipartisan support—a difficult task given the current political climate.
Continuing the Fight for Tax Fairness
Despite the challenges, Harris made it clear that she is committed to continuing the Biden administration’s focus on tax fairness. During her speech, she highlighted the disparity in tax rates between the ultra-wealthy and everyday Americans, such as teachers, nurses, and firefighters.
“It’s just not right that those who can most afford it are often paying a lower tax rate than our teachers and our nurses and our firefighters,” she said. “It’s just not right. It’s just not right.”
Harris’s approach signals a desire to address longstanding inequities in the tax system while still supporting business growth and innovation. As she continues to refine her economic policy platform, Harris is positioning herself as a candidate who can bridge the gap between promoting investment and ensuring fairness for all Americans.