As the 2024 presidential race heats up, some of Vice President and Democratic presidential nominee Kamala Harris‘ proposals have become a lightning rod for controversy and misinformation. Recently, two interesting myths have taken hold on social media: a “golf tax” and a tax on unrealized capital gains.
Let’s separate fact from fiction and chat a bit about VP Kamala Harris’ tax plan.
Harris ‘golf tax’
Contrary to viral social media posts, there is no evidence that Kamala Harris has proposed or supports a 20% or any other “golf tax.”
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Some discussions online are about whether golf-related expenses can be considered business expenses for tax purposes. Others mention old tax code provisions that included golf clubs on a list of businesses ineligible for certain government bonds.
Note: Under current tax law, the IRS generally doesn’t allow tax deductions for recreational club dues like golf club memberships. For more information, see IRS Publication 463.
- This golf excise tax rumor appears to have come from either a misinterpretation or deliberate distortion of discussions about broader tax reforms.
- A mention of the supposed tax on a parody site on X (formerly Twitter) has received a lot of attention.
However, the Harris campaign has not mentioned anything remotely resembling a golf-specific tax.
Unrealized gains tax
The more complex issue all over social media lately deals with taxing unrealized capital gains. Some critics have claimed that Harris plans to tax unrealized gains for all those in the U.S. (An unrealized gains tax is a proposed tax on the increase in value of assets that have not yet been sold.)
This understandably paints a negative picture of “average Americans” being forced to pay taxes on “paper increases” in their asset values. However, the characterization of unrealized gains taxes tied to Kamala Harris is misleading.
Where did this unrealized gains tax concern come from? As Kiplinger has reported, Kamala Harris supports the tax proposals outlined in the Biden administration’s FY2025 budget. This plan does include proposals for taxing unrealized capital gains. But if ever approved (more on that below), a key provision would only apply to individuals with a net worth exceeding $100 million.
- The Biden budget proposal targets the ultra-wealthy, not “average Americans.”
- It’s part of a broader minimum tax plan for high-net-worth individuals.
- The number of people affected would be minimal (estimated at less than 11,000 people in the U.S. according to the White House.)
The idea behind taxing unrealized gains for the ultra-wealthy is to address what some see as unfairness in the current U.S. tax system. Data show billionaires can often accumulate vast wealth through asset appreciation without paying taxes since capital gains are only taxed when assets are sold.
The Biden administration has said the proposal is supposed to ensure the wealthiest Americans pay at least a minimum tax (a “fairer share”) on their total income.
Related: Billionaire Minimum Tax in Biden Budget
Current capital gains tax rate
Capital gains taxes are levied on profits from the sale of assets like stocks, mutual funds, and real estate. Capital gains tax rates depend on your taxable income and how long you’ve held the asset. Remember that capital gains tax rates are generally lower than the tax rates for ordinary income like wages.
For more information, see: What Are the Capital Gains Tax Rates for 2024?
It’s also important to note that the U.S. Supreme Court could have something to say about taxing unrealized gains. While a majority of the justices upheld a mandatory repatriation tax earlier this summer that many saw as a “wealth tax,” the court left the door open to potentially invalidate future so-called wealth taxes — like a tax on unrealized gains.
Related: Tax on Unrealized Gains Survives Supreme Court
Kamala tax proposals
Specific details of Harris’ tax plan are not available, though the Democratic presidential nominee revealed some broad contours in recent days. These contours appear to generally align with the Biden administration’s budget proposals, focusing on increasing revenue from high-income earners and corporations. Many of those proposals are also contained in the Democratic 2024 Party Platform.
Middle-class tax cuts. Harris has also proposed enhancing tax credits for middle-class families, including increasing the child tax credit, providing up to $6,000 in tax credits for families with newborns, and enhancing the Earned Income Tax Credit. Harris’ economic plan also mentions tax breaks for first-time homebuyers and potential tax credits to incentivize homebuilders.
Kamala Harris and Donald Trump have each called for ending taxes on tips. Meanwhile, the Harris campaign has indicated support for President Biden’s pledge not to increase taxes on those making less than $400,000 a year.
Kamala tax: Bottom line
It’s important to note that, as always, major tax proposals like these face significant hurdles to becoming law. Even if Harris becomes President of the United States, any major tax changes would require congressional approval. Given the deep divides in Congress, the likelihood of controversial proposals passing, like a tax on unrealized gains, is low.
With less than 80 days left until Election Day, November 5, you’ll probably see more myths surrounding the candidate’s tax plans.
False or misleading political claims like the ones involving the nonexistent golf tax and mischaracterized unrealized gains tax highlight the importance of fact-checking and doing your own good research.
