Analysis: Kamala Harris’ $5 TRILLION tax plan could CANCEL OUT Trump-era tax cuts

08/29/2024 / By Laura Harris

Vice President Kamala Harris’ newly unveiled $5 trillion tax plan could reverse most of the tax cuts made possible by former President Donald Trump, according to an analysis.

The analysis made by the advocacy group Americans for Tax Reform (ATR) said the plan could undo key elements of the Tax Cuts and Jobs Act (TCJA). Trump signed the measure in December 2017, with the law taking effect in January 2018.

According to YourNews, the TCJA “had significantly reduced corporate and individual tax rates.” But ATR’s analysis suggested that increasing the corporate tax rate – a pillar of Harris’ proposal – could slow economic growth, discourage investment and lead to job losses, particularly in industries sensitive to changes in tax policy.

James Singer, spokesman for the Harris-Walz campaign, announced Aug. 19 on NBC News that the Democratic presidential nominee would raise the corporate tax rate from 21 to 28 percent if she wins in November.

Singer called it “a fiscally responsible way to put money back in the pockets of working people and ensure billionaires and big corporations pay their fair share.” He wrote in an email: “As President, Kamala Harris will focus on creating an opportunity economy for the middle class that advances their economic security, stability and dignity.”

But others begged to differ, including League of American Workers founder Steve Cortes.

“Giant corporations never pay a tax rate even close to the top corporate tax level. They have way too many exemptions, loopholes and tax lawyers, he wrote on X. “But small businesses do pay this rate and Kamala wants to punish Main Street enterprises even more than she already has.”

ATR analysis slams other pillars of Kamala’s tax plan

Harris’ proposal also includes an increase in capital gains and dividends taxes. This, in turn, would raise the rate to 44.6 percent – more than double the current rate in China, which maintains a 20 percent capital gains tax to date. (Related: Kamala Harris wants to raise corporate tax rate, punishing small businesses even more.)

In line with this, the ATR questioned whether the U.S. must have higher taxes than China. Specifically, they noted that the combined federal and state capital gains tax rates would exceed 50 percent in many states, with California potentially reaching 59 percent and states like New Jersey, Oregon, Minnesota and New York also facing rates above 50 percent.

The ATR also criticized the proposed 25 percent minimum tax on unrealized gains, an increase in the value of investments before they are sold, for individuals earning over $100 million. the group argued that taxing these gains could create significant financial strain for investors, especially during market downturns when asset values fluctuate.

Harris’ plan includes increasing the top individual tax rate for small business owners to 39.6 percent, up from 37 percent, which ATR warned could stifle entrepreneurship and deter small business growth. Additionally, the second “death tax,” which would impose a mandatory capital gains tax at death in addition to the existing estate tax, will only complicate estate planning and wealth transfer on family-owned businesses and farms.

Aside from these specific tax increases, the ATR pointed to several other provisions in Harris’ plan that could have wide-ranging economic implications. These include a quadrupling of the tax on stock buybacks, a 30 percent federal excise tax on electricity used in cryptocurrency mining and a $37 billion tax on American energy. ATR argued that these measures could increase the cost of doing business in the U.S., potentially leading to higher consumer prices and reduced competitiveness for American companies in the global market.

The ATR warned the public that these tax proposals could result in slower economic growth, reduced investment and a $5 trillion heavier tax burden on American households and businesses.

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