(WASHINGTON) — Vice President and Democratic presidential nominee Kamala Harris on Wednesday unveiled a vastly expanded $50,000 tax benefit for new small businesses and a lower long-term capital gains tax than that was proposed by President Joe Biden in his budget blueprint, one of her clearest breaks yet with Biden.
Speaking to a crowd of supporters in Portsmouth, New Hampshire, Harris said, “And while we ensure that the wealthy and big corporations pay their fair share, we will tax capital gains at a rate that rewards investment in America’s innovators, founders, and small businesses,” before proposing a 28% long-term capital gains tax on people making $1 million a year or more.
Biden previously called for a 39.6% tax rate on capital gains. It is unclear where Harris stands on the additional 5% tax. While Harris’ presidential rival former President Donald Trump has not explicitly outlined a position this cycle, in 2016 he supported capping capital gains taxes at 20%, and the Heritage Foundation’s Project 2025 calls for a 15% capital gains tax.
A source familiar with the plan told ABC News that Harris believes a more moderated approach toward capital gains taxes will balance with other measures she supports to crack down on billionaires and big corporations. Harris said on Wednesday that she supported a minimum tax rate on billionaires. The source said she also supports raising the corporate tax rate and quadrupling taxes on stock buybacks.
However, the move comes as Harris and Trump seek to sharpen their economic messages to voters before facing off in their first debate on ABC News in Philadelphia next week. Trump is scheduled to give his own economic policy address on Thursday.
Harris’ announcement is part of a broader effort to generate a record-breaking 25 million new small business applications in her first term if elected, and her tax plan would represent a tenfold expansion of a $5,000 deduction already available to entrepreneurs to help cover startup costs.
An official familiar with Harris’ plans said the $50,000 benefit would help offset the $40,000 it costs on average to start a small business. The terms of the proposal would also allow eligible enterprises operating at a loss to delay utilizing the benefit until they turn a profit.
Some profitable businesses could also defer the full benefit, opting to instead use it across multiple years by deducting only earnings from the first year of business and utilizing the remainder of the total $50,000 in future years, according to literature circulated to reporters from the Harris campaign.
Harris said her administration would also seek to develop a standard deduction for small businesses to reduce the burden and cost of filing taxes, and remove barriers around occupational licensing, which inhibits workers from working across state lines.
While the literature circulated to reporters did not estimate the program’s cost, Harris told the crowd that the the plan would provide access to venture capital, support “innovation hubs and business incubators,” and increase the number of federal contracts with small businesses.
Many aspects of Harris’ proposed tax program would likely require congressional approval. The current 2017 Tax Cuts and Jobs Act, signed into law by Trump, is set to expire next year.
Harris also said that her administration would provide low- and no-interest loans to already existing small businesses. The campaign’s literature detailed a fund that would enable community banks and Community Development Financial Institutions to cover interest costs as small businesses expand in historically underinvested regions.
“We will have a particular focus on small businesses in rural communities, like right here in New Hampshire,” she said.
Both Trump and Harris have repeatedly sought to strike populist economic tones in their messaging, promising to provide relief to middle-class earners and even finding agreement on a proposed phase-out of federal income taxes on tipped wages.
Under pressure to define aspects of her policy agenda, Harris unveiled a slew of additional economic priorities last month that included, among other policies, restoring the American Rescue Plan’s expanded Child Tax Credit, proposing $25,000 in down payment assistance to qualifying first-time home buyers, capping prescription drug prices and a federal ban on price gouging in the food sector.
Meanwhile, Trump has advocated for broader reforms to U.S. economic policy, which have included tax cuts for businesses and wealthy individuals alongside an across-the-board tariff hike on imports to the U.S., generally, with tax rates as high as 60% to 100% on Chinese goods.
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