Vice President Kamala Harris is turning to tax policy as a way to differentiate herself from both her Republican rival and her Democratic boss, an attempt to simultaneously project a more moderate image and stand by the soak-the-rich populism that animates much of her party.
During a campaign stop in New Hampshire on Wednesday, Ms. Harris for the first time explicitly said she would scale back one of President Biden’s policy proposals. Instead of taxing the investment earnings of Americans making more than $1 million a year at a 39.6 percent rate, as Mr. Biden has suggested, she called for 28 percent, though a surtax would apply on top of that.
Raising taxes on the rich has long been a central talking point for Mr. Biden and other Democrats, and while Ms. Harris has said she would increase taxes on the wealthy, the capital-gains adjustment was a message to investors and corporate executives: Ms. Harris is a different type of Democratic nominee.
Mr. Biden, who defeated progressives like Senator Bernie Sanders of Vermont in the 2020 primary, still embraced some of their ideas for taxing the wealthy. The plans largely targeted the investment earnings of the very rich, including a so-called billionaire minimum tax that would require Americans worth at least $100 million to pay taxes on unrealized gains of their stocks, bonds and other assets.
Ms. Harris, however, did not have to win a crowded primary campaign in which progressive policy proposals proliferated. She was instead suddenly thrust to the top of the ticket in a general election that Democrats across the party’s ideological wings believe must be won, whatever policy rhetoric necessary. With that opening, some donors have pushed her to redefine the party’s tax platform and abandon Mr. Biden’s tax ideas, like the billionaire minimum tax, adopted when the progressive faction of the party enjoyed more sway.
“My plan will make our tax code more fair, while also prioritizing investments and innovation,” Ms. Harris said on Wednesday. “So let us be clear: Billionaires and big corporations must pay their fair share in tax.”
So far, progressives have largely kept quiet about signs that Ms. Harris is moderating Mr. Biden’s agenda, focusing instead on winning the election and litigating intraparty disputes after a potential victory. Several of Mr. Biden’s top economic advisers are now advising Ms. Harris, making them optimistic that she would mostly follow Mr. Biden’s lead. Still, Ms. Harris and her team are cultivating close ties with C-suite executives, many of whom say they feel she will take their concerns more seriously than Mr. Biden did.
“She will hear what are the pros and cons, and she will adjust and is open to alternative ideas without compromising her values,” said Penny Pritzker, a billionaire and former commerce secretary under President Barack Obama. “One of the things I like that she’s saying is not, we have to choose between business and labor; we can work with both of them.” (Mr. Biden often referred to himself as the most pro-labor president in history.)
The jockeying is a reminder that Ms. Harris, if she won, would have to quickly translate campaign poetry into pages and pages of prose about taxes. Washington is on the brink of a far-ranging tax debate next year, when many of the tax cuts that President Donald J. Trump signed into law in 2017 are set to expire. Many of the expiring provisions, like lower marginal income rates, are ones that both Republicans and Democrats want to protect, and the need to eventually pass legislation doing so is fueling a much larger debate over how taxes in the world’s most important economy should be collected.
Mr. Trump — along with many in the Republican Party — has called for continuing all of the tax cuts that could end this year. The former president and current Republican nominee has also tossed out a series of other proposed tax cuts aimed at key political constituencies, like exempting tips from federal taxes and ending taxes on Social Security benefits. Ms. Harris has criticized Mr. Trump’s 2017 law for lowering the taxes of the rich and large companies, and she has called for raising the corporate tax rate to 28 percent from 21 percent, while Mr. Trump has flirted with cutting it to 15 percent.
But Ms. Harris has at the same time effectively embraced much of her Republican opponent’s signature legislative achievement by pledging not to raise taxes for any household making less than $400,000 a year, which amounts to roughly 98 percent of the population.
Campaigning in Nevada last month, she also adopted Mr. Trump’s plan to exempt tips from taxes, despite economists and tax experts having criticized the idea. She has also floated several additional tax cuts, like offering a larger child tax credit and expanding a deduction for new businesses, and at times she has adopted traditionally conservative rhetoric about taxes on the campaign trail, emphasizing that she would want to cut taxes for many Americans to allow them to “keep more of your hard-earned money.”
The upshot is that both the major-party candidates in this year’s election are racing to offer tax cuts to the vast majority of voters, and Ms. Harris is now paring back ideas for raising taxes on the rich to cover the cost of those cuts. Mr. Trump has not presented a plan for raising revenue to make up for the tax cuts, though he has floated broad-based tariffs that could become a sizable source of revenue.
“I think their emphasis is on the giveaway side rather than the takeaway side,” said Marc Goldwein, the senior policy director for the Committee for a Responsible Federal Budget, which advocates deficit reduction. “We’re seeing a race on the giveaways, but we’re not seeing any competition over who can do the most deficit reduction or who’s got the best plan to save Social Security or anything like that.”
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