As the Democratic nominee for the White House this November, Kamala Harris has begun shaping her policies for a potential promotion from vice president to president.
Monetary policies have been a primary issue so far in the current presidential race, with Harris and her Republican opponent promoting various tax policies in an effort to win over the electorate. Now that Harris has officially accepted the nomination for November, Newsweek has examined what Harris hopes to achieve with her taxation policy.
What Are Harris’s Major Tax Plans?
The fiscal policies announced by Harris so far in her campaign include raising the level of tax levied on corporations, ending taxes on tipped income and expanding current child tax credit provisions.
“Harris’ proposals largely built upon Biden’s economic platform, with an emphasis on delivering tax benefits to middle-class and lower-income Americans while raising taxes on corporations and the wealthy,” John Gimigliano, KPMG US head of tax legislative services, told Newsweek. “Still, vice president Harris managed to put her own spin on taxes with a few new ideas that look inspired by proposals from candidate Harris in 2019.”
“Together we will build what I call an opportunity economy,” Harris told supporters at a campaign rally in North Carolina. “Building up the middle class will be a defining goal of my presidency because I strongly believe when the middle class is strong, America is strong.”
Photo-illustration by Newsweek/Getty
Corporation Tax Hike
Harris has proposed raising the corporate tax rate from 21 percent to 28 percent. Trump, as part of the TJCA, created a single flat corporate tax rate of 21 percent, down from 35 percent under his Democratic predecessor Barack Obama.
Harris campaign spokesperson James Singer said the move would be part of “a fiscally responsible way to put money back in the pockets of working people and ensure billionaires and big corporations pay their fair share.”
When current President Joe Biden made the same proposal in his 2025 budget, the Tax Foundation has estimated that a hike to 28 percent would raise $1 trillion from fiscal years 2024 to 2034, while Penn Wharton Budget Model estimates it would raise $1.2 trillion throughout the same period.
Tax Increases Over $400k
Like President Biden, Harris has pledged not to increase taxes on anyone earning under $400,000 per year. Harris has proposed raising the top marginal income rate to 39.6 percent, an increase from the current 37 percent.
No Taxes on Tips
Taking a leaf from her opponent Trump, Harris announced in August that she supports ending federal income taxes on service worker wages. During a speech in Nevada, the same state Trump announced his policy in, Harris said: “When I am president, we will continue our fight for working families of America, including to raise the minimum wage and eliminate taxes on tips for service and hospitality workers.”
“Harris’ ban on taxing tips is poised to benefit small businesses immensely, especially in the food services industry,” Javier Palomarez, founder and CEO at United States Hispanic Business Council, told Newsweek. “For some local restaurants, tips may account for a majority of their employee’s income. Protecting this money from taxation will in turn put more money in the employee’s pocket, bolstering a restaurant’s ability to recruit and retain workers.”
However, the Tax Foundation has said such a policy could have its drawbacks as it could “add to the complexity of the tax code” as well as being a substantial revenue loss for the federal government.
“A tip exemption would be poorly targeted at low- and middle-income earners, given the relatively small share of the population working in tipped occupations,” the foundation said in recent analysis. “Worse, the exemption itself, and any safeguards added, would add to the complexity of the tax code overall. Depending on the design, an exemption could cost around $100 billion over the 10-year budget window.” Newsweek has contacted the vice president’s campaign team for comment via email.
The Committee for a Responsible Federal Budget has predicted such a policy would “reduce federal revenues by $150 to $250 billion over 10 years on a static basis and could reduce revenue significantly more once behavioral effects are incorporated.”
Child Tax Credit Expansion
Harris plans to reinstate the expanded child tax credit that was on offer during the coronavirus pandemic. In 2021, the Biden administration, as part of the American Rescue Plan Act, raised the child tax credit from $2,000 to $3,600 per child. Harris’s plan goes one step further, giving families with newborns $6,000 in total to be received in the baby’s first 12 months.
“We will provide $6,000 in tax relief to families during the first year of a child’s life,” Harris said during a policy speech in Raleigh, North Carolina.
