Election Day is a couple of months away… And taxes are on the ballot. Many provisions in the 2017 tax law are slated to expire after 2025. Donald Trump wants the 2017 law made permanent.
Kamala Harris is sticking with this pledge: No tax hikes if you make less than $400,000. We take this to mean that she would give her support to extending the tax breaks in the 2017 law to people earning less than $400,000, which are most taxpayers. Let’s look at other tax ideas Harris supports. Some are new, while others are retreads.
High-income individuals would pay more in taxes, if Harris gets her way. She’d bring back the top 39.6% income tax rate for people making $400,000 or more and hike the 3.8% net investment income surtax to 5% for these taxpayers.
The wealthy would pay more capital gains tax. Long-term capital gains tax would be imposed at ordinary tax rates up to 39.6% (44.6% with 5% NII tax added in) for taxpayers with taxable incomes over $1 million…$500,000 for separate filers.
Similar to Biden, she may want to tax unrealized gains upon death. This proposal would treat death as a realization event for income tax purposes… a deemed taxable sale at fair market value, with capital gains and losses reported on the decedent’s final income tax return…with a $5 million lifetime gain exclusion. And she might back a 25% minimum income tax on the ultrarich… people with at least $100 million in wealth. The tax would apply to taxable income plus unrealized capital gains, meaning the gain on appreciated assets not yet sold or disposed of. If this provision is ever adopted, expect opponents to quickly sue. Some Supreme Court justices don’t look favorably on taxing unrealized gains.
Families, first-time home buyers, tipped workers and others would get breaks. She’d bring back the 2021 expansions to the child credit…hiking the amount from $2,000 per child to $3,600, with monthly payments and full refundability. And she’d make it even bigger, by giving taxpayers a one-time child credit of $6,000, to be claimed on the parent’s tax return for the first year of the child’s life.
Among other proposals: Give first-time home buyers a credit of up to $10,000. Extend the expansions to Obamacare subsidies, allowing more people to get credits for buying health insurance through the marketplace. Plus make tipped income tax-free. There’s radio silence on what she’d do with the state and local tax deduction that itemizers claim on Schedule A. Some Capitol Hill lawmakers from high-tax states are pressuring leadership to get rid of the current $10,000 cap on SALT write-offs.
On business taxes, Harris wants to raise the 21% corporate tax rate to 28%. She would increase the 15% alternative minimum tax on very big corporations to 21%. She’d do away with what she and many Democratic lawmakers see as tax loopholes, while keeping the green-energy tax subsidies enacted in the Inflation Reduction Act. She’d quadruple the 1% excise tax on stock buybacks by publicly held firms. And she has proposed a new credit for home builders who build starter homes.