Vice President Kamala Harris, the presumptive Democratic presidential nominee, has a history of favoring more significant tax hikes on businesses and individuals than President Biden. As we approach the 2024 campaign, it’s crucial to understand the potential direction of Harris’s tax policy platform.
Three key questions arise: Will Harris advocate for more aggressive tax increases than Biden? Is she willing to deviate from Biden’s $400,000 tax pledge? How would a President Harris handle the Trump-Biden tariffs imposed on China and other trading partners? Furthermore, how would she address the upcoming expirations of the 2017 Tax Cuts and Jobs Act (TCJA) and the unsustainable trajectory of federal debt?
During her 2020 campaign and tenure as a senator from California, Harris proposed several changes to the tax code. These include raising the top marginal income tax rate for the top 1 percent to 39.6 percent, implementing a 4 percent ‘income-based premium’ on households earning over $100,000 annually to fund her version of ‘Medicare for All’, and creating a $3,000 refundable tax credit ($6,000 for married couples filing jointly) for low- and middle-income taxpayers. She also proposed raising the corporate income tax rate from 21 percent to 35 percent, expanding the estate tax, and imposing a financial transaction tax on stock, bond, and derivative trades.
Comparing Harris’s past proposals to the Biden-Harris administration’s fiscal year 2025 budget reveals some similarities, such as raising the top income tax rate for the top 1 percent of earners and increasing the corporate income tax rate. However, there are also significant differences in details and scope. For instance, Harris proposed a 35 percent corporate tax rate, while the FY 2025 budget suggests 28 percent. Harris supported a version of Medicare for All, financed by a proposed 4 percent tax on incomes above $100,000, while Biden has avoided such a proposal.
President Biden has consistently pledged not to raise taxes on households earning under $400,000. While Harris has supported this pledge as Vice President, her elevation to Democratic nominee provides an opportunity to reconsider this tax pledge. By stepping away from the pledge, Harris could consider broader policy options that align more closely with sound tax policy.
Former President Trump initiated a trade war by imposing about $80 billion of tariffs on imports. While the Biden-Harris administration has retained most of these tariffs, Harris has previously demonstrated a better understanding of the downsides of tariffs. As the new nominee, Harris would have the opportunity to lift these tariffs, reducing their economic impact and boosting after-tax incomes for lower- and middle-income households.
In conclusion, Harris’s past tax policy stances raise the question of whether, and how far, she might depart from the policies of the Biden-Harris administration. As we approach the 2024 campaign, these questions will become increasingly important.