3 Riskiest Financial Policies Proposed by Kamala Harris That Could Impact You
Written by
Andrew Lisa
Edited by
Gary Dudak
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Kamala Harris’ detractors have chided her for not offering enough specifics on her economic policy plans since she launched her campaign after President Biden dropped out of the race for a second term.
She recently responded by outlining several financial policy proposals that she plans to work toward if she emerges victorious in November. They include tax relief for small businesses, tax credits for entrepreneurs, down payment support for aspiring homeowners, a ban on price gouging, eliminating taxes on tips, an expansion of the child tax credit and an extension of outsized Affordable Care Act subsidies that are set to expire.
Experts, pundits and, of course, politicians, are parsing the prospective costs and potential benefits of those policies as the wider electorate works to understand them. However, some experts think that three of Harris’ proposals pose a serious risk to ordinary Americans and the larger economy. Here is a trio of her proposals that — directly or indirectly — could impact you.
Increasing Capital Gains Taxes on the Rich
Like President Biden, Vice President Harris believes the rich don’t pay their fair share in taxes and has taken aim at their investment returns, where the wealthy typically get most of their income.
In a country where millions of people live paycheck to paycheck, the rich rarely see the masses rising up to reduce their tax burden — but this specific strategy does not sit well with all.
“One of the riskiest financial policies proposed by Kamala Harris is her focus on implementing higher capital gains taxes, especially targeting those earning over $1 million,” said Dennis Shirshikov, finance professor at the City University of New York.
He’s referring to Harris’s proposal to tax long-term capital gains at a rate of 28% for those with seven-figure annual incomes. That’s higher than the current top rate of 20% but much lower than President Biden’s proposed rate of nearly 40%. Still, 28% is too high for some experts’ liking.
“While this is aimed at closing the income gap and ensuring the wealthiest pay their fair share, it risks discouraging investment, especially from small-scale investors who have been aggressively building portfolios in real estate or equities,” said Shirshikov, who has skin in the game as a long-time real estate investor and the head of growth at Summer. “An increase in capital gains taxes can deter long-term investments, which are essential for wealth growth for the middle class.”
Raising the Corporate Tax Rate
Former President Donald Trump’s 2017 Tax Cuts and Jobs Act (TCJA) lowered the corporate tax rate from 35% to 21%. Harris has proposed hiking it up to a middle ground of 28%. The nonpartisan Congressional Budget Office says the move would raise hundreds of billions of dollars in revenue from corporations that mostly can afford to pay it — but the plan is not without its detractors.
“While corporations are often labeled as greedy, they’re one of the biggest contributors to the American economy,” said Melanie Musson, finance expert with InsuranceProviders.com. “If taxes on corporations increase, they will earn less profit, be forced to lay off employees and become less competitive, especially with overseas competitors.”
Modifying Estate Tax Law
Harris has also suggested targeting the wealthy through changes to estate tax law, which rich households use to their advantage to circumvent the IRS when handing down generational wealth to their heirs.
According to Buckley Fine Law, current estate tax law exempts $13.61 million per person over the course of their lifetime. Anything over that is subject to a 40% tax rate. On Jan. 1, 2026, when the TCJA estate tax provision expires, the lifetime exemption will fall to $5 million.
Harris has proposed further lowering the lifetime exemption to $3.5 million and increasing estate tax rates — often called the “death tax” by those who want it eliminated — to 55%, 60% and 65%. On top of that, she wants to levy a 10% surtax on estates valued over $1 billion.
It’s not just the rich and their trust and estate attorneys who balk at these propositions.
“First of all, a death tax is a double taxation,” said Musson. “Second, the impact would prevent many family farms and small businesses from staying in the family. It could change the fabric of American agriculture and eliminate family farms altogether. The death tax would incentivize people not to plan for their retirement so they can leave an inheritance to their children, and instead depend on the government for support through retirement.”
Editor’s note on election coverage: GOBankingRates is nonpartisan and strives to cover all aspects of the economy objectively and present balanced reports on politically focused finance stories. You can find more coverage of this topic on GOBankingRates.com.
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