Harris courts business: less tax than Biden on capital gains

Kamala Harris is smiling on business, wearing more moderate clothes when it comes to the tax burden: she has unveiled scaled-down proposals on capital gains taxation, distancing herself from President Joe Biden. Speaking from New Hampshire, Harris offered an olive branch in the form of a plan that envisages overall capital gains taxes of 33 per cent, a 28 per cent rate plus a 5 per cent surcharge - six percentage points lower than what the Democrats have so far touted.

Biden, to be exact, had proposed 39.6 per cent, the same top rate asked for incomes over one million, plus the surtax that would raise the total 'hit' on capital gains to 44.6 per cent. At the moment, however, the tax is very low, 23.8 per cent including a limited 'surtax' of 3.8 per cent.

The move on capital gains represents a significant shift for Harris herself: until now, the Democratic nominee had fully supported Biden's budget plans, which contain tax increases on such investment gains. In response, the business community has stepped up its pressure for flexibility from Harris on tax strategies. And Harris's advisors believe that the change in his position now reflects a commitment to make corporations and wealthy groups pay more without risking overly penalising investment.

The game is not over. At stake is still a levy, currently on the Democratic drawing board, that targets the wealth of Americans with large fortunes: it prescribes the taxation of unrealised gains over five million at the time of death and over one hundred million during life. Calls from major party backers to rethink the measure have recently intensified.

Harris from New Hampshire, however, also kept the spotlight on measures with a more popular and progressive take. He offered relief to small start-ups in the form of increases in tax deductions for expenses incurred, increased tenfold to $50,000 from $5,000.