VP’s Policy Outline Backs Higher Taxes on Firms, Billionaires, Cap Gains, Buybacks
On Wednesday evening, Vice President Kamala Harris put out a policy book: A New Way Forward for the Middle Class. In it, she outlines positions on taxes including raising taxes on corporations, billionaires and the wealthiest investors, and a promise to “roll back Trump’s tax cuts for the richest Americans” – a reference to the 2017 Trump-GOP tax, parts of which are set to expire at the end of this year. She reasserts her pledge not to raise taxes on anyone making less than $400,000 a year, and reiterates her plan to expand working-family tax credits.
Specific revenue raisers through taxation of the wealthy and corporations contained in her plan include:
- “A minimum income tax on billionaires”: The Biden-Harris administration has proposed a Billionaire Minimum Income Tax of 25% on the nation’s handful of wealthiest households, those worth at least $100 million. Included in income for the purposes of the tax would be unrealized capital gains – the increased value of unsold investments – which under current rules can go untaxed forever. Though applying to just 0.02% of all American households, the tax would bring in over $500 billion in revenue over 10 years.
- Raising the corporate tax rate to 28 percent: The policy document notes that after the Trump tax law cut the corporate tax rate from 35% to 21%, corporations failed to “pass on the benefits of these very large tax cuts to workers or meaningfully increase investment in the United States. In fact, some companies moved jobs and profits overseas.” Boosting the corporate tax rate just half way back to its former level, as her plan would do, raises $1.35 trillion in revenue over a decade.
- Increasing the capital gains tax rate on taxpayers with incomes over $1 million to 28%. Currently the top tax rate on long-term capital gains – the profit from selling an investment held over a year for more than its purchase price – is 20%. That’s little more than half the 37% top tax rate on wages. ATFAF supports equalizing the investment tax rate with the wage rate for the highest-income households, so wealthy investors pay the same rate as the tax rate paid by people who draw a paycheck, like nurses, teachers, and firefighters.
- Quadrupling the stock buyback tax. Corporations spend hundreds of billions of dollars buying back their own stock, which artificially inflates the value of their shares to the benefit of wealthy shareholders, but at the expense of other uses for that corporate cash, such as hiring, raising wages or making investments in the business. As part of the Biden-Harris administration’s 2022 Inflation Reduction Act, a 1% tax was imposed on corporate share repurchases. Quadrupling the rate to 4% would raise almost $170 billion over 10 years.