The Washington Examiner is keeping track of Vice President Kamala Harris’s tax and spending proposals as she campaigns for the presidency.
In years past, as a senator, vice president, and presidential candidate, Harris has sketched out specific policy goals by introducing legislation and submitting campaign proposals. She endorsed left-wing ideas for increasing taxation of the wealthy and implementing major new spending programs. For example, she called for guaranteeing a job for every citizen and abolishing private healthcare plans. More recently, as a member of the administration, she has backed President Joe Biden’s budget proposals.
As the Democratic nominee this cycle, though, Harris has said little about her economic policy agenda. Her campaign website does not list any proposals. Still, campaign aides have distanced her from some of the policies she has supported in the past and indicated support for some tax and spending proposals, many of which Biden pursued, that can be modeled for cost. Here’s a summary of what is known.
For context, the Congressional Budget Office projects that the federal government will collect nearly $63 billion in revenue and spend roughly $85 billion over the next 10 years.
Tax hikes
Harris’s campaign has said she supports all of the revenue raisers in Biden’s budget that “ensure billionaires and big corporations pay their fair share.” The campaign also told the Committee for a Responsible Federal Budget, an outside group that favors reductions in the federal budget deficit, that Harris supports the taxes in Biden’s fiscal 2025 budget proposal.
Still, the Washington Examiner has contacted the campaign on multiple occasions for more details about Harris’s tax plan but has not received responses.
Assuming, though, that Harris backs the major tax hikes in the budget, here is what she is calling for.
Corporate tax hikes
Harris would increase the corporate tax rate from 21%, which was set by the 2017 Trump tax overhaul, to 28%. The Biden administration touted the measure as making corporations pay their “fair share,” although Republicans have argued it would make the United States less competitive by giving it one of the higher corporate tax rates among developed countries.
She would also raise the corporate minimum tax, which Democrats enacted under Biden, from 15% to 21% and raise taxes on corporations’ foreign earnings. Lastly, she would raise the rate of a new tax on corporate stock buybacks that was also included in the 2022 Inflation Reduction Act, the law Biden signed that includes major climate and healthcare provisions.
Cost: Together, those changes would raise about $2.1 trillion over 10 years, according to the White House budget.
Top income tax rate hike
The most straightforward Biden budget proposal for taxing the rich is to raise the top marginal income tax rate.
Republicans lowered the top rate in 2017, from 39.6% to 37%. For this year, that rate applies to income above $578,126 for a single taxpayer.
That tax cut, though, is set to expire with the rest of the individual Trump tax cuts at the end of 2025. Biden’s budget calls for increasing it back to the 39.6% rate for incomes over $400,000 for unmarried individuals.
Cost: The rate hike would raise $246 billion over 10 years, according to the White House Budget.
Implement a new tax on the unrealized capital gains of the wealthy
One of the most controversial fiscal policies Biden proposed and Harris now embraces is a plan to tax the unrealized capital gains of very wealthy individuals.
The tax would be a major change from current practice, which is to tax capital gains only when the asset in question is sold.
Under the Biden proposal, households with a net worth of $100 million would have to report their assets to the IRS. Then, they would be assessed a minimum rate of 25% on all their taxable income, which would include unrealized gains on assets.
Liberals have said the plan is necessary to limit tax-avoidance schemes that allow extremely wealthy households to pay lower effective tax rates than working-class households. But the proposal has cost Democrats notable support among venture capitalists, who say that it would be unworkable and would harm business creation.
Cost: The tax on unrealized capital gains would raise about $500 billion, according to the White House budget.
Capital gains rate hike for wealthy
The Biden budget would also raise the tax rate on realized long-term capital gains from a maximum of 23.8% to the same rate as on labor income for people earning over $1 million. It would also change the taxation of assets given as bequests to ensure that they are subject to capital gains tax and tighten the rules on estate and gift taxes.
Cost: These changes would raise about $400 billion, according to the White House budget.
Limit deductions for compensation to high-earning employees
Current law limits the amount of compensation paid to executives that corporations are allowed to deduct from their taxable income. The Biden budget calls for expanding that limitation to compensation above $1 million for all employees, not just executives.
Cost: This provision would raise $272 billion, according to the Biden budget.
The Trump tax cuts
At the end of the next year, all of the individual provisions of the 2017 Tax Cuts and Jobs Act, better known as the Trump tax cuts, will expire.
That means that, without new legislation, a number of tax cuts will end. That includes the reductions to the individual rates, the expansion of the child tax credit, the increase in the exemptions to the estate tax, and a new break for businesses that file through the individual side of the code.
It will also mean, though, the expiration of some revenue-raising provisions included in the 2017 overhaul. Most prominent is the $10,000 limit on deductions for taxes paid to state and local governments, often referred to as SALT. That provision is hated by many Democrats who represent high-tax states such as California and New York, as well as some blue-state Republicans.
It is not clear how Harris would handle the expiring tax provisions. She has said she will keep the tax cuts for those earning under $400,000 a year.
But she has not said whether she would let the SALT cap lapse, as sought by many in her party, nor has she discussed other revenue-raisers.
Cost: If Harris were to keep the tax cuts for those making under $400,000 a year but allow the estate tax provisions and SALT cap to expire, the cost over 10 years would be $3.3 trillion versus letting the 2017 overhaul expire, according to the Committee for a Responsible Federal Budget.
Tax cuts
Harris has also pushed for some tax cuts, particularly those that are seen as helping lower- and middle-class households.
Eliminating taxes on tips and raising the minimum wage
Harris has called for the elimination of taxes for tipped workers, a policy endorsed just weeks before by her GOP rival for the presidency, former President Donald Trump.
“When I am president, we will continue our fight for working families of America, including to raise the minimum wage and eliminate taxes on tips for service and hospitality workers,” she said during a rally in Nevada, a state with many tipped workers.
Exempting tips from federal taxation would be a straightforward tax cut. However, tax experts have argued that it would probably lead more service workers to demand to be paid in tips rather than wages, which would result in a correspondingly larger reduction in federal revenues.
Harris’s plan to raise the federal minimum wage is much murkier given that she did not say by how much, although she has discussed $15 per hour. Currently, it is $7.25.
Cost: The CRFB found that, taken together, these two proposals would increase deficits by $100 billion to $200 billion over 10 years, before accounting for changes in tipping behavior.
Expanded child tax credit
The 2017 tax overhaul raised the child tax credit to $2,000 per child. The American Rescue Plan, the major pandemic relief legislation signed by Biden in 2021, raised the credit to $3,600 per child 5 and younger and to $3,000 per child older than 5.
The 2021 revamp also made the credit fully refundable, meaning it could be claimed even if the parents did not owe taxes or have taxable income. In effect, the credit became a major family subsidy. But it was only in effect for one year, and the CTC reset to the terms set by the Trump tax overhaul — which, in turn, will expire next year.
Harris has called for reinstating the version of the CTC implemented in the American Rescue Plan and for providing parents with an additional $2,400 fully refundable credit during the first year of the child’s life.
Cost: The plan to expand the base of the child tax credit amount would add some $1.66 trillion to the deficit over the next decade, and the boost for newborns would cost about $132 billion over that same timeline, according to the University of Pennsylvania Wharton School budget model.
Expand the earned income tax credit
The earned income tax credit is an antipoverty program that provides refundable credits to workers with very low incomes, meaning that if the credit is larger than their tax liability, the government sends them a check. Generally, it benefits poor workers who are raising children.
The 2021 American Rescue Plan temporarily expanded the credit for workers who are “childless” or not raising children in their homes. Harris has called for expansion of the credit along the lines of the ARP version.
Cost: The expansion would cost $126 billion over the next 10 years, according to the Penn-Wharton budget model.
Extending Obamacare subsidies
The American Rescue Plan and the Inflation Reduction Act increased subsidies for people who enroll in healthcare plans through the Obamacare exchanges. The IRS administers those subsidies, meaning that they appear as tax cuts.
The expansion, though, is temporary and set to expire next year. Harris has called for its extension.
Cost: Extending the subsidies would cost $126 billion over the coming decade, according to Penn-Wharton.
Spending plans (what we know so far)
Again, the Harris campaign has not offered many new spending proposals, although it is likely that more policy ideas will emerge in the coming weeks.
Down payment support for first-time homebuyers
Harris has proposed offering qualified first-time homebuyers an average of $25,000 in assistance for a down payment. While the campaign has provided little by way of details about her plan, it is similar to a Biden budget proposal.
The plan is designed to make homebuying more affordable, given historically rising home prices, and to put it within reach for younger families. Critics contend that subsidies such as this can actually push up home prices by boosting demand without increasing supply.
Cost: The cost of this would be $138 billion over 10 years, according to Penn-Wharton. The CRFB estimates it would be roughly $100 billion, although it noted that could be higher.
Housing tax credits
Harris has proposed expanding the low-income housing tax credit, a major program that gives developers breaks for providing rental units for low-income households. The program accounts for much of the construction of the country’s affordable housing, meaning units that are designed for people under certain income levels, so it has support on both sides of the aisle. Some free-market economists, though, have questioned its effectiveness.
Harris is also calling for new tax credits to reward developers who build starter homes sold to first-time homebuyers.
Lastly, she is proposing a $40 billion fund for states and localities to pursue housing “solutions.”
Cost: The cost for those combined affordable housing agenda items is roughly $100 billion over 10 years, according to the CRFB, which notes that the actual costs may differ because there are still details missing from the plan.
Caps on drug prices
Harris has called for the expansion of provisions of the Inflation Reduction Act that lower prescription drug prices. The IRA capped spending on insulin at $35 per month for Medicare beneficiaries, and she is calling for that cap to be imposed on all healthcare plans.
The IRA also sets an annual $2,000 cap for prescription drug spending for Medicare beneficiaries, which is supposed to take effect in 2025. Harris, however, is pledging to extend that provision to all private health insurance plans, requiring insurers to foot the bill for drug spending over the out-of-pocket maximum.
Also included in the IRA is the ability for Medicare to directly negotiate the price of prescriptions with pharmaceutical companies. For the first round of negotiations, the Centers for Medicare and Medicaid Services selected 10 drugs, the new maximum fair prices of which will take effect in 2026. Up to 15 of the most expensive drugs for the Medicare program will be selected for negotiated prices to take effect by 2028.
Harris promised to accelerate the speed of Medicare drug price negotiations as part of her plan to lower prescription drug costs.
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As the law currently stands, pharmaceutical companies that do not participate in the drug price negotiations must either entirely pull their products from the Medicare and Medicaid markets or face a 95% excise tax. Litigation against the law from the affected drug manufacturers has been unsuccessful so far.
Revenues: The prescription drug pricing proposals would raise $250 billion over 10 years, according to the CRFB.
Healthcare reporter Gabrielle Etzel contributed to this report.