Editors at National Review Online explore Vice President Kamala Harris’ ideas about federal taxes.
Kamala Harris’s campaign has confirmed that she supports the tax proposals that the, well, Biden-Harris administration unveiled in March. Attacking (alleged) corporate price-“gouging” has become one of the themes that the vice president hopes will take her to victory in November. She clearly believes that supporting government gouging will be another.
Starting with corporate taxation, rates would increase from 21 percent to 28 percent. Currently, the OECD average is a little under 24 percent. Raising the level paid by U.S. corporations to 28 percent (and that’s before considering state taxes) would damage their ability to compete internationally, hitting their growth prospects and by extension those of the U.S. as a whole, something that would hurt all Americans, not just those making $400,000 a year or more. Moreover, while increases in corporate taxes are, of course, technically paid by corporations, the real cost will be felt elsewhere, by their shareholders, customers, and workers as dividends are hit and companies look to offset higher taxes with higher prices and tighter control of wages and staffing levels. But it could have been worse. In her campaign for the Democratic nomination in 2020, Harris had called for the corporate-tax rate to be increased to 35 percent.
There are other attacks on American business included in the vice president’s plans for companies, including an increase in the minimum tax paid by the largest corporations from the 15 percent established in the Inflation Reduction Act to 21 percent, yet another a reminder that once a (relatively) modest change that increases tax is introduced, it tends not to stay modest for long.
On the income tax, Harris supports increasing the top rate from 37 percent to 39.6 percent for individuals earning $400,000 (and households making $450,000 — the marriage penalty is alive and well). On top of that, the Medicare tax would rise from 3.8 percent to 5 percent. That could create a top marginal rate of 44.6 percent (close to half of every marginal dollar, an affront to fairness), and, again, that’s before state taxes.
