Factbox: Kamala Harris' economic plans on taxes, childcare, housing

Zillow

25/09/2024 10:00

WASHINGTON, Sept 25 (Reuters) - U.S. Vice President
Kamala Harris has announced a basket of economic proposals
aiming to lower living costs for middle and lower-class
Americans and boost the economy overall by using tax incentives
and other tax shifts.
    Some of her ideas build on unfinished business in President
Joe Biden's economic agenda but expand their scope and size.   
    Here's what we know so far: 
    
    TAX ON THE WEALTHY  
    Harris has echoed President Joe Biden's promise not to raise
taxes on households that earn less than $400,000 a year.
        She has quietly endorsed most of the nearly $5 trillion
in tax hikes over a decade in Biden's fiscal 2025 budget
proposal, which would boost the top income tax rate to 39.6%
from 37%.
    These include a new 25% minimum tax on people with fortunes
exceeding $100 million, including on unrealized capital gains.
For those earning more than $1 million annually, Harris has
proposed raising the long-term capital gains tax rate paid after
selling assets like stocks to 28% from 20%, an increase far
smaller than the 39.6% full top income tax rate proposed by
Biden.
    
    TAX ON BUSINESSES 
    Harris has proposed increasing the corporate tax rate to
28%, partially reversing former president and Republican rival
Donald Trump's 2017 tax law that cut company tax rates to 21%
from 35%. The step would raise $1 trillion for the federal
government over a decade, budget experts estimate, but cut into
company profits, Wall Street says. 
    Big U.S. companies pay a far lower effective tax rate than
their foreign competitors at an average of 16%, a Reuters
analysis showed. Any broad corporate tax changes would need to
be passed by Congress. 
        
    CHILD TAX CREDIT 
    Harris has kept Biden's proposal to permanently restore a
one-year, COVID-era increase in the Child Tax Credit to as much
as $3,600 per child from $2,000 currently, which is scheduled to
drop to $1,000 after 2025. She also has proposed a $6,000 bonus
one-time credit for families with newborns.
    Trump's vice presidential running mate, JD Vance, has
floated raising the annual Child Tax Credit to $5,000, but the
idea has not been adopted as an official Trump policy proposal.
          
    AFFORDABLE HOUSING
    Harris has detailed plans to spur new construction and
reduce costs for renters and homebuyers, largely through tax
incentives. They include tax credits for builders of homes for
first-time buyers and affordable rental units, along with a
$25,000 tax credit to help first-time buyers with down payments
for the next four years. 
    Harris is also proposing a $40 billion "innovation fund" to
encourage local governments to build more affordable homes,
doubling a Biden budget proposal that would make competitive
grants to local governments that show they can get results.     
    U.S. home prices have risen 50% in the last five years and
rents have risen 35%, according to real estate firm Zillow,
largely due to a housing shortage. Harris has set a goal to
increase U.S. housing construction by 3 million units over the
next four years.
    
    SMALL BUSINESS TAX CREDIT
    Harris also has deviated from Biden's economic plan by
proposing a new tax deduction of up to $50,000 for new small
business start-up costs, a policy aimed at supporting
entrepreneurs and drawing a contrast with Trump's tax cuts for
large corporations. The 33 million U.S. small businesses were
responsible for 70% of net new jobs created since 2019,
according to Small Business Administration data.
    The current small business tax deduction for startup
expenses tops out at $5,000, far below the average $40,000 cost
to start a new business, according to Biden administration
officials.
    
    CHILDCARE 
    "My plan is that no family, no working family, should pay
more than 7% of their household income in child care," Harris
told the National Association of Black Journalists in September.
U.S. parents are currently paying as much as 19.3% of median
family income per child for care, Department of Labor figures
show. 
    The 7% figure echoes the Child Care and Development Block
Grant, a program Harris has touted that currently supports about
1 million children in low income families. 
    Harris' campaign has not detailed how the childcare plan
would work.
    
    HIGH GROCERY PRICES 
    Harris has vowed to enact the "first-ever federal ban on
price gouging on food and groceries" that aims to stop big
corporations from unfairly exploiting consumers while generating
excessive profits. Defining such excessive price hikes is not
clear, but some proposals in the U.S. Senate show a potential
path to enactment.     

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Comparing Harris, Trump tax plans and deficit impact     https://www.reuters.com/markets/us/how-harris-trumps-tax-spending-plans-affect-us-debt-2024-09-10/
Comparing the budget impact of Trump's and Harris' tax and
spending plans    https://reut.rs/4e36B6D
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 (Reporting by Heather Timmons and David Lawder; Editing by
Jamie Freed)
 ((Heather.Timmons@thomsonreuters.com;))