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As Vice President Kamala Harris outlines her economic agenda, the Democratic presidential nominee has called for higher taxes on wealthy Americans and corporations — although experts say her plan is unlikely to gain traction.
Harris in August endorsed the tax increases proposed by President Joe Biden in his fiscal year 2025 budget, including a 25% minimum tax on total income, including so-called “unrealized gains,” or asset growth, exceeding $100 million. This is known as the billionaire minimum tax.
As of June 2023, there were 10,660 centi-millionaires, or people with at least $100 million in assets, living in the U.S., according to a report from Henley & Partners, a wealth and migration advisory firm. The report used data from New World Wealth.
“It’s just not right that those who can most afford it are often paying a lower tax rate than our teachers and our nurses and our firefighters,” Harris said at a campaign event on Wednesday in New Hampshire. “That’s why I support a billionaire minimum tax and corporations paying their fair share.”
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If enacted, taxpayers with wealth above the $100 million threshold would have to report unrealized gains for each asset class annually, including the basis, or original purchase price, and market value as of Dec. 31, according to the U.S. Department of the Treasury. They would also report total liabilities.
Currently, investors incur capital gains taxes of 0%, 15% or 20% after selling a profitable asset owned for more than one year. Plus, there’s an extra 3.8% net investment income tax for higher earners.
Biden has called for a billionaire minimum tax in his 2025, 2024 and 2023 fiscal year budgets and Senate Democrats pushed for a similar levy in October 2021. But the proposals have failed to gain traction.
“There’s very little political support for this,” said Steve Rosenthal, senior fellow at the Urban-Brookings Tax Policy Center.
The Harris campaign did not provide a comment to CNBC.
There’s also been pushback from the business community. Billionaire entrepreneur Mark Cuban on Thursday told CNBC’s “Squawk Box” that he doesn’t think Harris would tax unrealized gains.
“Every conversation I’ve had is that it’s not going to happen,” he said.
“If you tax unrealized gains, you’re going to kill the stock market,” he added.
Billionaire minimum tax is an ‘unworkable proposal’
While many Americans favor higher taxes on the wealthy, policy experts have criticized components of Biden’s proposed billionaire minimum tax.
“It moves in the opposite direction of sound tax policy,” said Erica York, senior economist and research manager with the Tax Foundation’s Center for Federal Tax Policy.
The policy “poses significant administrative and compliance challenges,” including liquidity concerns, possible gaming and IRS disputes, she said. “I still think it ends up being an unworkable proposal.”
Rosenthal offered a similar critique of the proposal, including possible legal challenges, particularly after a June Supreme Court ruling.
Although the justices didn’t comment directly on wealth taxes, the ruling left questions about whether a future wealth tax could pass constitutional muster.