Kamala’s 33% federal rate + New York’s 10.9% = 43.9%
Much higher than China’s 20% and Europe’s average of 18%
New York will face a top combined federal-state capital gains tax rate of 43.9% under the Kamala Harris tax increase plan. 33% federal + 10.9 = 43.9%.
Harris recently vowed to raise the top federal capital gains tax rate to 33% (She’s raising the regular capital gains tax to 28% from the current 20%, and raising the Net Investment Income Tax to 5.0% from the current 3.8% for a total federal capital gains tax rate of 33%.)
As noted by Wall Street Journal tax reporter Richard Rubin, the 33% is the highest in decades. He wrote: “the all-in top capital-gains rate would be the highest since 1978.” That’s the Jimmy Carter era famous for its economic stagnation.
The Harris capital gains tax burden would kill jobs and growth and hurt America’s — and New York’s — competitiveness.
China has a 20% capital gains tax. The European average capital gains tax is 17.9%.
Under the Harris plan, 10 states will be saddled with combined federal-state capital gains tax rates of 40% or higher: New York, California, New Jersey, Massachusetts, Minnesota, Vermont, Washington, Hawaii, Maine, and Oregon (and the District of Columbia).
Under the Harris proposal, many New York small businesspersons looking to sell their business after decades of hard work will be hit. Hard working New Yorkers who started a small business in their 20s who now wish to sell the business in their 60s will have to give 33% of the “gains” to Washington and another 10.9% to New York coffers.
Capital gains are not indexed to inflation, so Americans are stuck paying tax on some “gains” that are nothing more than inflation — which is created by Washington and then taxed by Washington. The Biden-Harris high inflation of recent years makes this especially painful.
Capital gains taxes are often a form of double taxation. When capital gains come from stocks, stock mutual funds, or stock ETFs, the capital gains tax is a cascaded second layer of tax on top of the federal corporate income tax of 21%. Harris has also proposed a federal corporate income tax hike to 28%.
The Harris capital gains tax hike will also hit many families when parents pass away. Harris has endorsed a second Death Tax (separate from and in addition to the existing Death Tax) by taking away stepped-up basis when parents die.
This would result in a mandatory capital gains tax at death, a forced tax realization event.
As previously reported by CNBC:
“When someone dies and the asset transfers to an heir, that transfer itself will be a taxable event, and the estate is required to pay taxes on the gains as if they sold the asset,” said Howard Gleckman, senior fellow in the Urban-Brookings Tax Policy Center.
The Harris proposal to take away stepped-up basis has already been tried, and it failed: In 1976 congress eliminated stepped-up basis but it was so complicated and unworkable it was repealed before it took effect.
As noted in a July 3, 1979 New York Times article, it was “impossibly unworkable.”
NYT wrote:
“Almost immediately, however, the new law touched off a flood of complaints as unfair and impossibly unworkable. So many, in fact, that last year Congress retroactively delayed the law’s effective date until 1980 while it struggled again with the issue.”
As noted by the NYT, intense voter blowback ensued:
“Not only were there protests from people who expected the tax to fall on them — family businesses and farms, in particular — bankers and estate lawyers also complained that the rule was a nightmare of paperwork.”
Harris is calling for about $5 trillion in tax increases over the next decade.
Stay tuned for updates at ATR’s special website Kamalanomics.org