Kamala Harris' plan to raise taxes on corporations and the wealthy

Tax policy is an area that tends to invite highly specific ideas during U.S. presidential campaigns, as virtually all Americans are forced to reckon with the tax regime every April. To that end, Vice President Kamala Harris and former President Donald Trump have starkly different tax proposals. Harris, the Democratic Party nominee, has released additional details about her proposed economic agenda in recent weeks that have helped paint a more complete picture of what her administration's approach to taxes would be if she were to win the election.

Tax credits dominate

One of the key points that Harris has tried to reinforce is that her administration would not raise taxes on anyone making less than $400,000 a year. Rather than proposing any kind of sweeping overhaul of the tax system like the so-called flat tax that Republicans once campaigned on, Harris' plans mostly rely on tweaks on the margins to deliver relief to families and businesses. 

The Harris campaign wants to make the structure of the pandemic-era Child Tax Credit, which was briefly distributed as a monthly direct cash payment in 2021, permanent. Researchers credited that expanded tax credit with a dramatic drop in child poverty, but it was allowed to expire at the end of 2021 when Democrats were unable to secure the votes to renew it. Harris has also proposed a new $6,000 tax credit for new parents, to help with the blizzard of costs associated with bringing a new child into the world. Finally, Harris has suggested an unspecified increase in the Earned Income Tax Credit (EITC), which benefits lower income individuals and families. 

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Raising taxes on corporations and the wealthy

Harris wants to raise the tax rate on corporations from its current 21% to 28%. Republicans, under President Donald Trump, had dropped that rate from 35% to 21% with their 2017 Tax Cuts and Jobs Act. Harris also supports raising taxes on wealthy Americans through a variety of schemes, including raising the capital gains tax, levying a tax on unrealized capital gains, increasing taxes on the sale of things like stocks, bonds and real estate, increasing the Corporate Alternative Minimum Tax and putting a 25% tax on individuals with assets of over $100 million. She also wants to raise the tax on stock buybacks from 1% to 4%. 

The Harris tax plan seeks to make housing more affordable. It would offer incentives to developers to build new low-income housing through an expansion of the Low-Income Housing Tax Credit (LIHTC) and the creation of a new tax credit, what the campaign calls the Neighborhood Homes Tax Credit, which would support building new homes or rehabbing existing housing stock in lower-income communities. Harris has also proposed a $10,000 tax credit and up to $25,000 in down payment support for "first-generation home buyers" — i.e. first-time home buyers whose parents did not own their own homes. 

Harris has advocated for a significant increase in the size of the tax credit for new businesses, from $5,000 to $50,000. Following Trump's promise to abolish taxes on tips, Harris has also discussed eliminating some taxes on tips for service and hospitality workers making less than $75,000. 

The response

"We find the tax policies would raise top tax rates on corporate and individual income to among the highest in the developed world, slowing economic growth and reducing competitiveness," said the conservative Tax Foundation. A Penn Wharton School of Business analysis of Harris' overall economic plan predicted a GDP decrease of 1.3% over the next decade. Lower and middle-income Americans would do better under the Harris plan than wealthier Americans, according to Penn Wharton. 

A Reuters analysis found that Harris' plans will have a less adverse impact on the federal budget deficit than Trump's. Some budget analysts, though, have not yet been able to fully model the impact of Harris' new plans and revisions to existing proposals. "The campaign talking points are moving faster than the budget models," said Shai Akabas of the Bipartisan Policy Center to Reuters.