WASHINGTON (Reuters) – U.S. Vice President Kamala Harris has announced a basket of economic proposals aiming to lower living costs for middle and lower-class Americans and boost the economy overall by using tax incentives and other tax shifts.
Some of her ideas build on unfinished business in President Joe Biden’s economic agenda but expand their scope and size.
Here’s what we know so far:
TAX ON THE WEALTHY
Harris has echoed President Joe Biden’s promise not to raise taxes on households that earn less than $400,000 a year.
She has quietly endorsed most of the nearly $5 trillion in tax hikes over a decade in Biden’s fiscal 2025 budget proposal, which would boost the top income tax rate to 39.6% from 37%.
These include a new 25% minimum tax on people with fortunes exceeding $100 million, including on unrealized capital gains. For those earning more than $1 million annually, Harris has proposed raising the long-term capital gains tax rate paid after selling assets like stocks to 28% from 20%, an increase far smaller than the 39.6% full top income tax rate proposed by Biden.
TAX ON BUSINESSES
Harris has proposed increasing the corporate tax rate to 28%, partially reversing former president and Republican rival Donald Trump’s 2017 tax law that cut company tax rates to 21% from 35%. The step would raise $1 trillion for the federal government over a decade, budget experts estimate, but cut into company profits, Wall Street says.
Big U.S. companies pay a far lower effective tax rate than their foreign competitors at an average of 16%, a Reuters analysis showed. Any broad corporate tax changes would need to be passed by Congress.
CHILD TAX CREDIT
Harris has kept Biden’s proposal to permanently restore a one-year, COVID-era increase in the Child Tax Credit to as much as $3,600 per child from $2,000 currently, which is scheduled to drop to $1,000 after 2025. She also has proposed a $6,000 bonus one-time credit for families with newborns.
Trump’s vice presidential running mate, JD Vance, has floated raising the annual Child Tax Credit to $5,000, but the idea has not been adopted as an official Trump policy proposal.
AFFORDABLE HOUSING
Harris has detailed plans to spur new construction and reduce costs for renters and homebuyers, largely through tax incentives. They include tax credits for builders of homes for first-time buyers and affordable rental units, along with a $25,000 tax credit to help first-time buyers with down payments for the next four years.
Harris is also proposing a $40 billion “innovation fund” to encourage local governments to build more affordable homes, doubling a Biden budget proposal that would make competitive grants to local governments that show they can get results.
U.S. home prices have risen 50% in the last five years and rents have risen 35%, according to real estate firm Zillow, largely due to a housing shortage. Harris has set a goal to increase U.S. housing construction by 3 million units over the next four years.
SMALL BUSINESS TAX CREDIT
Harris also has deviated from Biden’s economic plan by proposing a new tax deduction of up to $50,000 for new small business start-up costs, a policy aimed at supporting entrepreneurs and drawing a contrast with Trump’s tax cuts for large corporations. The 33 million U.S. small businesses were responsible for 70% of net new jobs created since 2019, according to Small Business Administration data.
The current small business tax deduction for startup expenses tops out at $5,000, far below the average $40,000 cost to start a new business, according to Biden administration officials.
CHILDCARE
“My plan is that no family, no working family, should pay more than 7% of their household income in child care,” Harris told the National Association of Black Journalists in September. U.S. parents are currently paying as much as 19.3% of median family income per child for care, Department of Labor figures show.
The 7% figure echoes the Child Care and Development Block Grant, a program Harris has touted that currently supports about 1 million children in low income families.
Harris’ campaign has not detailed how the childcare plan would work.
HIGH GROCERY PRICES
Harris has vowed to enact the “first-ever federal ban on price gouging on food and groceries” that aims to stop big corporations from unfairly exploiting consumers while generating excessive profits. Defining such excessive price hikes is not clear, but some proposals in the U.S. Senate show a potential path to enactment.
(Reporting by Heather Timmons and David Lawder; Editing by Jamie Freed)
