Democratic presidential nominee Kamala Harris has proposed a tax plan specifically targeting the ultra-wealthy, igniting a firestorm of debate, particularly among Silicon Valley’s wealthiest investors.
Harris’ plan aims to raise nearly $5 trillion over a decade by imposing a tax on the unrealized gains of Americans with assets exceeding $100 million. This proposal, also part of President Joe Biden’s 2025 federal budget plan, would have a significant impact on billionaires like Elon Musk, Warren Buffett, and Jeff Bezos, as well as successful startup founders and investors.
The Financial Times reported that many tech investors have expressed strong opposition to the plan, arguing that it would hinder innovation by penalizing high-performing startups. Marc Andreessen, co-founder of the venture capital firm Andreessen Horowitz, warned that the tax could make startup companies “completely implausible.”
The tax plan has also created friction with wealthy donors who support Harris’ 2024 presidential campaign. Some of these donors have urged Harris to remove the tax proposals from her election manifesto, as reported by the New York Times.
Despite the backlash, proponents of the tax plan emphasize that it addresses inequality in the U.S. tax system, which currently favors wealth-based income over labor income. However, the proposal faces significant political opposition and potential legal challenges.
This proposed tax plan is a continuation of the policies of the Biden administration, where Harris has played a key role. At the Democratic National Convention, Harris expressed her support for Biden’s proposal to raise the federal corporate tax rate from the current 21% to 28%, a move that was met with disapproval from Wall Street. The anticipated higher revenue from this tax rate hike is expected to fund economic proposals, including a $6,000 tax credit for parents of newborns and the reinstatement of the pandemic-era expanded Child Tax Credit.
The tax plan has sparked a broader debate, with hedge-fund manager Bill Ackman proposing a “fair and practical” billionaire tax plan in response to Harris’ push to tax unrealized gains. Ackman suggested making borrowing an amount exceeding one’s basis in a stock taxable, as a way to address the issue of the ultra-wealthy avoiding income taxes.
The implications of Harris’ tax plan are far-reaching and are likely to continue to be a major topic of discussion as the 2024 presidential election approaches.
