Kamala Harris Tax Plan: The 2024 Election

In an unprecedented turn of events, Vice President Kamala Harris is the Democratic nominee for President in place of President Joe Biden.

Many major democrats such as President Obama, Senator Schumer, Senator Pelosi, Senator Ohmar, and the Clintons have endorsed her.

Impacts of the 2024 Election

While intriguing for many political reasons, this also will have a major effect on the 2025 Armageddon, Tax Cliff, Tax Super Bowl – you name it that is coming in 2025.

In 2017, President Trump passed the 2017 Tax Cuts and Jobs Act, and the cuts have a major cliff or expiration approaching at the end of 2025.

Such items as the halving of the standard deduction, a return to 2017 tax rates, and the end of the qualified business income deduction will be coming if it is not extended.

This puts Harris in a very intriguing position should she win the candidacy and the election.

But, where has the current VP landed on tax in the past?

Will she follow President Biden’s stances, or venture out on her own policies?

Harris’s Political History

Harris’s first appearance in Capital Hill was in 2016 when she was elected senator for the state of California.

Harris’s voting history with tax bills started with a resounding ‘no’ against the TCJA in 2017.

Since then, she has helped pass multiple bills, mostly those stemming from COVID relief in 2020.

Harris, as VP, was the tie breaker on the Inflation Reduction Act which provided many green energy tax credits and subsidies such as an increase to the ITC to 30%, the saleability of the tax credits, and making many tax extenders permanent.

She did not have to cast her vote as VP regarding the American Rescue Plan Act of 2021, but would likely have done so had that vote also been a deadlock.

What is intriguing is while she has co-sponsored many bills with Elizabeth Warren, she has never publicly endorsed a wealth tax which Warren is commonly known for.

She is indeed progressive, but as much or more so than Biden?

Harris’s Previously Proposed Tax Package

In her 2024 campaign, Harris has stepped away from several of her old proposals and no longer supports them.

Harris previously made distinguishing points from herself and Biden during the 2020 Democratic Primaries.

Harris’s most well-known package was the Livable Income for Families Today (LIFT) Act.

LIFT was meant to be a tax credit similar to the earned income tax credit but for families in the income range of $50,000-$100,000.

After that, the credit would no longer apply to anyone over that threshold and was meant to be phased out in the $50-$100k range.

This provision was estimated to cost approximately $3 trillion (Tax Foundation and Tax Policy Center) and was going to be paid for by repealing essentially all of the TCJA.

This is interesting because traditionally Biden’s administration has put a line in the sand that they do NOT wish to remove those individual tax cuts on American taxpayers who make $400,000 or less.

More of Harris’s Tax Plans

Additionally, Harris initially proposed a 4% Premium tax on taxpayers who made over $100,000 to help pay for Medicare For All (A policy that Biden was critical of in a debate).

She did take a step away from this policy.

Originally, she proposed increasing the current corporate rate from 21% to 35%. However, she has recently reduced the proposed tax rate to 28%, which is aligned with Biden’s proposed 28% corporate tax in his 2025 Greenbook.

She also has come out in support of increasing the new corporate AMT tax rate from the IRA (that she was the final vote on) from 15% to 21%.

Harris has also introduced a provision from Biden’s Greenbook that would increase capital gains and qualified dividend tax rates from 20% to 28% for those who have taxable income over $1 million and tax-unrelated capital gains at death above $5 million exemptions (double for joint filers).

Also, she proposed a ‘Minimum Tax’ on unrealized gains for taxpayers who earn over $100 million in net worth. This tax would essentially have a pro-rated tax estimate be paid out based on the unrealized appreciation at a 25% tax rate.

Harris did show support for Biden on the rent control provision that has been suggested, which would cause landlords who own more than 50 units to keep rent increases at 5%, or they would lose access to Low-Income Housing Tax Credits.

Kamala Harris’ Economic Policy

On August 16, 2024, Vice President Kamala Harris released her economic plan to provide tax relief to low to middle-class income Americans.

This plan intends to continue what was started in the Biden Administration.

Child Tax Credit

Many believe that her release of certain tax credits is to counteract the Republicans’ sentiment that she is “anti-family”.

Responding to JD Vance’s desire to raise the child tax credit to $5,000, Harris proposed reigniting the American Rescue Plan’s child tax credits with an increase from $2,000 to a potential $3,600.

A new development comes with her desire for a child tax credit of up to $6,000 for parents of newborns. The policy would also increase the earned income tax credit up to $1,500.

Grocery Prices

To provide further assistance to the American family, Harris announced a plan to implement a federal ban on price-gouging food and groceries.

Her campaign stated, “There’s a big difference between fair pricing in competitive markets, and excessive prices unrelated to the costs of doing business.”

Housing Changes

Harris announced numerous plans to make housing more affordable. She plans to provide 3 million new starter homes in her term by providing tax incentives for builders.

With the increase in the supply of homes, she is proposing a $25,000 first-time homebuyer down-payment benefit.

To help rent costs, Harris will push for the Preventing the Algorithmic Facilitation of Rental Housing Cartels Act and the Stop Predatory Investing Act. The first will disallow price-setting from companies that utilize specific software and algorithms to raise rents, and the second will remove the tax benefits for corporate investors who purchase multiple single-family homes and resell them for much higher prices.

This effort of these bills is directed at stopping data firms and “Wall Street” investors.

Kamala Harris: Progressive & Unique Policies

All in all, Harris has shown herself to be a normal progressive on tax, with unique policies of her own as well.

Harris has proposed a ‘Business Standard Deduction’ for businesses in their first year that would allow starting businesses to deduct organizational and start-up expenses. The current cap of § 195 is $5,000 and this would be increased to $50,000.

However, Harris has not sounded off on everything. The failed Build Back Better Act also had intriguing provisions that Harris would likely have been the deciding vote on had Manchin and Sinema not rebelled against the party.

The BBB had provisions that she has promised to continue, with perhaps a slightly altered implementation.

She has suggested, in Biden’s Greenbook, significant changes to § 1061 regarding applicable partnership interests that apply to profits/carry interests. It would be modified to have carried interests be taxed at ordinary rates for those who have taxable income of over $400,000 (again, targeting Biden’s overall promise of not raising taxes on those who earn more than $400,000).

Another provision that was part of the BBB that is also now part of Harris’s program is opening § 1411 NIIT (Net Investment Income Tax) by including ‘active’ business income from pass-throughs and increasing the tax rate from 3.8% to 5%. This provision, once again, only applies to those over $400,000 of taxable income.

She has also indicated that she would prefer to make § 461(l) Excess Business Losses a permanent part of the tax code. This would likely create a lot of ‘room’ to incorporate other tax credits and incentives that Harris would like to deploy in her tax bill.

How Does This Apply to Real Estate Investors?

As more tax plans are released, the impact on real estate investors seemingly increases, whether through housing legislation or market adjustments due to economic provisions.

While Harris’s policies are broad and not necessarily ‘targeted’ towards investors, it appears Harris will be looking to increase rates and provide more tax credits and incentives to housing and those who provide lower-income housing.

Harris has also shown the desire to let the TJCA provisions expire.

This would include 100% bonus depreciation. Currently, the rate is 60%, but this will continue to drop 20% each year until it is 0% at the start of 2027.

She also is targeting mega backdoor ROTH strategies on high-income earners who have high balances, likely over $10 million or more.

She would also cap the amount of deferrable gains via § 1031 Exchanges to $500,000, which would be a major change to current rules.

Conclusion

More will continue to be confirmed as this unprecedented election unfolds.

During this historical time, we are your resource for the 2024 candidates’ tax policies and potential plans.