Harris capital gains tax plan softens Biden proposal

Vice President Kamala Harris on Wednesday proposed a 28% tax on long-term capital gains for households with an annual income of $1 million or more, lower than the 39.6% rate President Joe Biden laid out in his 2025 fiscal year budget.

“We will tax capital gains at a rate that rewards investment in America’s innovators, founders and small businesses,” the Democratic presidential nominee said at a rally in North Hampton, New Hampshire. The Wall Street Journal was first to report Harris’ capital gains tax plan.

Long-term capital gains, or assets held for more than one year, are currently taxed at a maximum rate of 20%.

Harris’ announcement marks a rare divergence from Biden’s economic platform.

The newly minted Democratic presidential nominee has so far largely kept her economic proposals in line with those of her current boss.

Harris has adopted much of the president’s aggressive rhetoric toward big corporations and had previously endorsed his proposed budget’s tax increases as a way to pay for her spending plans.

But some pieces of that corporate pressure campaign have received pushback, including from within the Democratic Party.

“I don’t think a blanket tax on unrealized gains is a good thing,” Rep. Ro Khanna, D-Ca., said in an interview Wednesday with CNBC’s “Squawk Box.”

Khanna’s comment referred to taxing the potential gains that an asset accumulates before it is sold, which Biden supports. Harris has not announced any plans to diverge from Biden’s proposal, which would tax unrealized gains for households worth at least $100 million.

Khanna cited potential unintended consequences for startup entrepreneurs that could stifle business growth.

Over the past several weeks, Harris has worked to simultaneously position herself as a friendly face to business but also a warrior against corporate greed and a champion of the middle class.

As Harris makes her economic pitch, her Republican opponent, former President Donald Trump, has railed against her record and painted himself as the best candidate for the U.S. economy.

“Trump cash versus Kamala crash. We’re going to have a crash like 1929 if she gets in. It will not be pretty,” Trump said in a video posted to Truth Social during Harris’ New Hampshire rally Wednesday.

To counter those attacks, Harris has been presenting more plans specifically targeted at helping businesses, especially ahead of the Sept. 10 debate against Trump, hosted by ABC News.

Harris also announced Wednesday a new proposal to provide small businesses a $50,000 tax deduction for their startup expenses, 10 times the amount of the current level.