(Bloomberg) — Vice President Kamala Harris has been silent on a Democratic bid to tax unrealized investment gains — casting doubt on how hard she would push for a key point of the party's efforts to raise taxes on billionaires.
Harris, who has already pledged to roll back one of President Joe Biden's key capital gains tax policies, is refusing to elaborate on her support for other pillars of the administration's vision to raise taxes on businesses and the rich. That includes a White House plan to tax unrealized gains, a major proposed change to the Internal Revenue Code designed to raise taxes on wealthier Americans, who are often able to avoid taxes. according to the current rules.
The Democratic nominee still supports a minimum tax on billionaires, a campaign official said in a brief statement, speaking on condition of anonymity. Her team declined to provide specifics about that proposal or comment directly on how unrealized gains would be handled.
The Harris campaign also declined to say whether it supports the specific minimum tax parameters for billionaires included in Biden's annual budget request to Congress, which — despite the name — would apply a 25% minimum tax on the income of those with at least $100 million. in assets. Her campaign has been mum on whether she would seek to change a provision in the tax code that allows many wealthy individuals to avoid capital gains taxes entirely when they pass their wealth on to their heirs.
The move to tax unrealized gains was one of the most polarizing features of Biden's budget proposal — critics saw it as vague to implement and a barrier to growth, while advocates hailed it as an innovative way to tax more the rich.
Harris' silence comes as she has stepped up her pro-business rhetoric and pushed her political agenda to the middle to woo Republican and independent voters with polls showing her deadlocked against Republican rival Donald Trump. She described herself as a “pragmatic capitalist” in an interview with Telemundo on Tuesday, saying she is part of a new generation of leadership that is “actively working with the private sector to build America's new industries.”
Days after Harris replaced Biden as the Democratic presidential nominee in late July, her campaign said she supports the revenue measures in the president's budget request, though it has since broken down. with him on the goal of raising the capital gains tax, calling for an increase in the top rate from 20% to 28%, rather than the 39.6% that Biden has embraced.
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Capital gains taxes are generally paid when an asset is sold, meaning that people who hold an asset that has appreciated significantly do not immediately pay taxes on the growth. In some cases, the wealthy simply borrow money against profits instead of having to sell.
Some of the wealthiest people owe relatively little in taxes relative to their overall wealth because they hold their wealth indefinitely, greatly increasing their personal wealth through unrealized gains, but rarely recording any income on paper, which would trigger an IRS bill.
Ambiguity over unrealized gains could be strategic — by avoiding taking a position, Harris is able to give herself room to negotiate in the future on a part of her tax agenda that is closely scrutinized by Wall Street and Silicon Valley.
Billionaire investor Mark Cuban, an ally of Harris, predicted over the weekend that a tax on unrealized gains would not be implemented. “This is an economy killer. Kamala knows that,” Cuban said at an event Saturday in Arizona, according to NBC. “You haven't heard him talk about it.”
The debate is, in some ways, theoretical, with polls showing Republicans on track to take control of the Senate even if Harris wins the presidency. A divided government dims her hopes of passing the new taxes she wants and could pressure her to avoid delving into proposals with little chance of success.
Harris is grappling with how hard he can break away from Biden in the race against Trump, where his campaign has said a windfall tax would “kill 75,000 jobs, reduce investment incentives, hurt growth long-term economic and will target family farms and family- owned more small businesses.” Trump, for his part, has campaigned on a long list of politically targeted tax cuts that economists have warned will add trillions to the national debt.
Biden's budget, which has proposed including unrealized gains when calculating income for the billionaires' 25% minimum tax, has also raised concerns from tax professionals.
The plan “would be a departure from how we're treating capital gains under current law and how we've treated it historically,” Garrett Watson, a senior policy analyst at the right-leaning Tax Foundation, said in an interview. “We are generally more skeptical of this kind of approach.”
Harris has also campaigned on a number of other tax measures, including higher corporate tax rates, an expanded child tax credit and expanded deductions for start-ups.