Democratic vice-presidential candidate Kamala Harris is proposing a $5 trillion tax increase, the biggest in American history, which would reshape the economy and harm businesses, investors, and ordinary Americans.
In a bid to transform the American economy, Kamala Harris is proposing a staggering $5 trillion tax increase, the largest in the nation's history. If enacted, this sweeping tax plan would fundamentally alter the relationship between the government and its citizens, with a profound impact on businesses, investors, and ordinary Americans.
Harris' plan calls for increasing the corporate tax rate from 21% to 28%, a significant 33% increase that would make American businesses less competitive globally. When combined with state levies, it would place American corporations among the highest taxed in the developed world, potentially leading to a resurgence of corporate inversions, where companies relocate offshore to reduce tax costs.
Harris' Tax Armageddon: A Threat to American Economy and Wallets
Economists and common sense dictate that workers and customers ultimately bear the brunt of such corporate tax hikes, as companies are forced to lower wages and raise prices to cover the increased tax burden. Notably, over one million American small businesses file as corporations, meaning this tax hike would not only impact large companies but also countless smaller enterprises.
Harris also proposes raising the capital gains tax rate to match the personal income tax rate, nearly doubling the current rate. This would severely disincentivize investment in America, leading to a decline in access to credit and a sharp drop in equity prices, which ordinary Americans rely on for retirement savings.
Harris' Tax Armageddon: A Threat to American Economy and Wallets
The lower tax rate on investment income is not arbitrary; it reflects the fact that this income is not indexed to inflation and is already taxed at the corporate level. Thus, Harris' proposal would effectively double-tax investment income.
Harris' plan includes ending the tax-free transfer of most estates, treating death as a taxable event for capital gains purposes. This would significantly impact baby boomers planning their wills, reducing the amount they can pass down to their heirs.
Harris' Tax Armageddon: A Threat to American Economy and Wallets
The elimination of the step-up in basis would particularly affect small businesses and family farms, as heirs may not be able to afford the associated tax hit and would be forced to sell their properties to generate liquidity.
Harris wants to overhaul the way taxes are calculated by implementing a wealth tax, taxing paper gains in property and investments before they are realized. This would impose a tax on expected profits that may never materialize if the market declines.
Harris' Tax Armageddon: A Threat to American Economy and Wallets
For example, investors in companies like Peloton (stock price down 98%) or WeWork (delisted after bankruptcy) would face substantial tax penalties on phantom gains that never materialized. Small business owners who have worked tirelessly to increase the value of their businesses would be hit with major tax bills every year, punishing them for their hard work and appreciation.
Harris opposes the Tax Cuts and Jobs Act of 2017 and plans to allow it to expire as scheduled at the end of next year. This would result in a substantial tax increase for Main Street, eliminating the 20% small business tax deduction, immediate expensing of capital, and lower tax rates.
Harris' Tax Armageddon: A Threat to American Economy and Wallets
The Tax Cuts and Jobs Act contributed to historic shared economic prosperity in 2018 and 2019, enabling many small businesses to survive the challenges posed by the Biden-Harris administration. Its expiration would be a devastating blow to the small business community.
Harris' tax plan also includes increasing the top marginal personal income tax rate to 44.6% and quintuple the stock buyback tax. These proposals would further burden taxpayers and discourage investment and economic growth.
Harris' tax plans represent a significant step toward socialism, particularly when considering the potential for them to be expanded to include more and more taxpayers once implemented.
In an era of political division, it is crucial for political independents who may not fully align with Republicans on every issue to consider the grave consequences of these tax proposals and vote against this tax Armageddon that threatens the American economy and the financial well-being of its citizens.
