Vice President Kamala Harris on Wednesday stepped up her efforts to win over the business community and retain the affection of her biggest donors, using a campaign event in New Hampshire to roll out her plan for an expanded tax break for start-ups and announce that she would tax investment income less aggressively than President Biden had proposed.
The new tax positions from Ms. Harris represent the most policy distance she has put between herself and Mr. Biden since she replaced him as the Democratic nominee.
He had proposed taxing capital gains at 39.6 percent for Americans who make more than $1 million a year. Ms. Harris said on Wednesday that she would tax investment income for those Americans at a rate of 28 percent, a reversal from her earlier support for the tax increases included in the White House budget released this spring.
“If you earn a million dollars a year or more, the tax rate on your long-term capital gains will be 28 percent under my plan,” Ms. Harris said. “Because we know when the government encourages investment, it leads to broad-based economic growth and it creates jobs, which makes our economy stronger.”
Ms. Harris’s proposed rate of 28 percent does not include an additional surtax on investment income, according to two people familiar with the campaign’s proposal. One of those people said a 5 percent surtax would apply on top of the 28 percent, bringing the total rate to 33 percent. With the surtax, Mr. Biden’s proposal would have raised the top capital-gains rate to 44.6 percent. The top capital-gains tax rate now is 23.8 percent, inclusive of a 3.8 percent surtax.
The ideas follow what had been an effort by Ms. Harris to coast largely on Mr. Biden’s agenda during the opening weeks of her campaign. She had sought to take credit for what she says are his successes while offering an array of plans to combat higher prices and inflation, problems that voters have tended to hold Mr. Biden at least partly responsible for.
In addition to her policy shift, Ms. Harris tiptoed away from the language Mr. Biden had used during his re-election campaign, arguing that she was running not only to block former President Donald J. Trump from returning to office but to usher in an agenda that would excite her voters.
“When we say fight, it is a fight for something, not against something,” she said. “That’s what we’re talking about when we talk about a new way forward. This is for something.”
Ms. Harris spoke to a crowd of about 3,000 people from behind bulletproof glass at an outdoor rally at a brewery in New Hampshire’s Seacoast region, the most Democratic corner of the state. The banner hanging over the stage read “Opportunity Economy,” a phrase the vice president has used to describe her vision for policies intended to support the middle class.
The visit to New Hampshire was Ms. Harris’s first as the Democratic presidential nominee, an indication her team views the Granite State’s four electoral votes as competitive even though the state is widely considered safer Democratic territory than the larger political battlegrounds that have attracted far more attention this summer.
While she has raised more than $540 million since Mr. Biden ended his campaign and endorsed her, Ms. Harris and some of her top aides have faced pressure from wealthy donors to abandon some of the president’s most ambitious ideas for taxing the rich, including a proposal to raise a novel tax on Americans worth at least $100 million, The New York Times has reported.
Many of the wealthiest people in America derive their riches from the stocks, bonds and other assets they own, meaning they would disproportionately benefit from lower proposed taxes on investment income, which is generally taxed at a lower rate than regular income like wages. Mr. Biden’s ideas already faced skepticism on Capitol Hill and were unlikely to become law.
Ms. Harris has sought to present herself as an ally to businesses and investors in a way that Mr. Biden did not. That has meant courting donors from Wall Street as well as Silicon Valley, which Ms. Harris once represented as a senator from California, and embracing some of the language and policy ideas favored by businesses.
“My plan will make the tax code more fair while prioritizing investment and innovation,” she said in New Hampshire. “Billionaires and big corporations must pay their fair share in taxes.”
While Ms. Harris cast the expanded deduction for young companies as a way to drive economic growth, tax experts said the proposed policy was ultimately a modest change. Under current law, companies can deduct $5,000 of start-up costs immediately and then write off other qualifying expenses over 15 years. Ms. Harris’s plan would essentially speed up a company’s ability to deduct its start-up costs.
“It’s a question of timing,” said Garrett Watson, a senior policy analyst at the Tax Foundation, a think tank in Washington that tends to support lower taxes. “Instead of having it immediately, you have to do a chunk of it over that 15-year period of time.”
That could help new businesses, but Mr. Watson said the biggest tax benefit of the change would go to new companies that do not stay in business long enough to deduct all of their start-up expenses over 15 years. (Many start-ups fail.) The size of the tax break would be relatively small, most likely around $20 billion over 10 years, experts estimated, and the impact on overall economic growth could be small.
“It’s a good talking point, but start-up businesses, they only account for a portion of economic activity, so I don’t anticipate this having much impact on the economy overall,” said Kyle Pomerleau, a senior fellow at the right-leaning American Enterprise Institute. “It’s a good thing but a small thing.”
Politically, focusing on small companies is a way for Ms. Harris to present a business-friendly agenda while still drawing a contrast with Mr. Trump. He has suggested that he would cut the corporate tax rate, which generally applies to larger companies, to as low as 15 percent, from 21 percent. Ms. Harris’s campaign has said she would raise the corporate tax rate to 28 percent, while also proposing on Wednesday to reduce regulations for small businesses and support their expansion.
Overall, though, both Ms. Harris and Mr. Trump have focused on cutting taxes on the campaign trail. Mr. Trump has said he wants to end taxes on Social Security benefits and taxes on tips, a proposal that Ms. Harris ultimately endorsed, while she has called for expanding the child tax credit, among other steps. The two candidates both want to extend tax cuts Mr. Trump signed into law in 2017, with Ms. Harris pledging to not increase taxes for any household making less than $400,000 a year.
New Hampshire made a natural spot for Ms. Harris’s announcement. Nearly half the workers in the state are employed by small businesses, the highest percentage in the battleground states, according to statistics collected by the Small Business Administration. And it has a sizable contingent of swing voters.
Mr. Biden had also built a robust campaign operation in New Hampshire before his miserable debate night against Mr. Trump in June led him to drop out. But Ms. Harris’s takeover of the ticket has brought the state back into the column of likely Democratic victories, polls show.
Mr. Trump has not held a rally in New Hampshire since before the Republican primary election in January. On Wednesday, he tried to offer competition to Ms. Harris’s appearance by calling into a local morning radio show. The former president said he planned to campaign in the state again before the election.
Karoline Leavitt, a spokeswoman for the Trump campaign, said Ms. Harris and Mr. Biden had “been a disaster for New Hampshire’s small-business community.”
“New Hampshire’s small businesses are the backbone of our state’s economy,” Ms. Leavitt said. “Small-business owners and workers are struggling to keep up with the increased cost of living in our state. Kamala’s words today ring hollow. Her record speaks volumes.”
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