The exit of President Joe Biden from the presidential campaign and the emergence of Vice President Kamala Harris as the likely Democratic Party presidential nominee has upended the tax legislative outlook at a critical juncture for tax policy.
Larger events have eclipsed tax discussions, but the November election will be very import for the future of tax legislation. Much of the Tax Cuts and Jobs Act (TCJA) is set to expire, potentially triggering broader tax reform.
Harris is expected to absorb many key aspects of Biden’s tax platform, but there could be significant differences. She generally ran to the left of Biden in the 2020 primary, including on tax policy, though she may move more to the center in this general election.
And while tax policy was not the most prominent focus of her career in public service, she still has a meaningful record that provides some insight into how she might govern, if elected:
- Like Biden, Harris has proposed repealing much of the TCJA, including returning the top individual rate to 39.6% and applying these rates to capital gains and dividends.
- Harris in 2020 proposed raising the corporate rate all the way back to 35%, much higher than Biden’s 28% proposal.
- Harris has proposed a fee (or surtax) on banks with $50 billion or more in assets and a financial transaction tax (0.2% on stock trades, 0.1% on bond trades, 0.002% on derivatives) to pay for ‘Medicare for All’ plan she championed while competing with Sens. Bernie Sanders, I-Vt., and Elizabeth Warren, D-Mass., for the Democratic nomination in 2020. It’s possible she runs instead on continued expansion of the Affordable Care Act, but a financial transaction tax could become a part of the conversation as a revenue-raiser in next year’s fiscal debate if Harris is elected.
- Harris supports Inflation Reduction Act-related policies like the major increases to alternative energy tax credits, and the labor and sourcing provisions tied to them.
Harris is just beginning to reintroduce herself to the American public, and may distance herself from past stances she took in a crowded 2020 Democratic primary, as she attempts to appeal to voters in the general election.
Biden-Harris go populist on housing
Before Biden dropped from the campaign, the Biden administration introduced its latest tax-related housing proposal on July 16, aimed at capping rent increases. Under the proposal, “corporate landlords” with more than “50 units in their portfolio” would lose bonus depreciation when annual rent increases exceeded 5%, excluding new construction and substantial renovation.
Like other recent tax-related proposals aimed at curbing the cost of housing, this would need Congress to pass legislation. The proposal will not become law this year, but could continue to be a promise of the fledgling Harris campaign.
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