Vice President Kamala Harris and former President Donald Trump both recently floated new tax proposals that could be major touchstones for the anticipated 2025 rewrite of the tax code.
Trump offered his most definitive statement yet on a potential 15% corporate rate, but caveated this proposal in important ways. Harris proposed a new capital gains rate, offered to increase start-up expensing, and explicitly endorsed several key tax increase proposals from President Joe Biden.
As part of a broader release of new positions to fill out her policy platform, Harris proposed raising the rate on capital gains for those with more than $1 million in income to 28% (before the tax on net investment income, which she is proposing to raise from 3.8% to 5%). The proposal is break from Biden, who proposed tax capital gains at ordinary income rates of up to 39.6%, but is consistent with early House versions of the Build Back Better packages.
The vice president also proposed a new $50,000 deduction for startups, which presumably refers to an increase in the current $5,000 deduction allowed under Section 195.
Harris had also been presumed to be inheriting much of Biden’s tax platform, but her campaign has now made that stance more explicit, directly referencing several provisions, including raising the corporate tax rate to 28%, raising the top personal income tax rate, quadrupling the stock buyback tax, and implementing a “billionaire’s tax” on unrealized gains.
Meanwhile, Trump recently shifted focus from recent tax cut proposals targeting individuals to those targeting businesses. In a recent economic policy speech, Trump pledged a 15% corporate rate “solely for companies that make their product in America.” No details were made available for how such a rate provision would operate or what activity it would include. The 15% rate represents a (partial) return to the corporate rate proposal in his 2016 campaign, and the focus on domestic manufacturing reiterates how he views taxes and trade competition as intrinsically linked. Trump has discussed implementing sweeping tariffs, and has some authority to act with Congress under previous law delegating trade policy authority to the executive branch. He has also stated that tariffs could help offset the impact of lowering other taxes for the federal government.
The election is pivotal for tax policy as built-in changes to the tax code at the end of 2025 will provide a unique opportunity for tax reform. For more information on how this could impact businesses and tax planning, see our comprehensive articles:
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