(Reuters) – U.S. Vice President Kamala Harris has announced a series of economic proposals aimed at lowering the cost of living for middle- and lower-class Americans and boosting the broader economy through tax breaks and other tax shifts.
Some of her ideas build on President Joe Biden’s unfinished economic agenda but expand its scope and scale.
Here’s what we know so far:
INDUSTRIAL INCENTIVES
Harris on Wednesday pledged new tax breaks to boost domestic manufacturing and investment in sectors that will “define the next century,” including biomanufacturing, aerospace, artificial intelligence, quantum computing and blockchain, advanced nuclear energy and batteries.
She also said she would offer tax breaks to expand “good union jobs” in longstanding iron, steel, coal and other traditional industrial communities. Details on the size and scope of the incentives and investments were not disclosed.
Harris announced new investments in U.S. basic technology research, through the National Science Foundation, the Department of Energy’s National Laboratories and other agencies.
She also announced plans to cut red tape to speed construction of new infrastructure and industrial projects and to use the Defense Production Act and other tools to increase U.S. capacity to process critical minerals and reduce dependence on supplies from China.
TAX ON THE RICH
Harris reiterated Biden’s pledge not to raise taxes on households earning less than $400,000 a year.
She has quietly approved most of the nearly $5 trillion in tax increases in Biden’s fiscal year 2025 budget proposal, which would raise the top income tax rate from 37% to 39.6%.
These include a new 25% minimum tax on those with more than $100 million in assets, including unrealized capital gains. For those making more than $1 million annually, Harris has proposed raising the tax rate on long-term capital gains paid after selling assets such as stocks from 20% to 28%, a much smaller increase than the full 39.6% top income tax rate that Biden proposed.
CORPORATE TAX
Harris has proposed raising the corporate tax rate to 28%, partially reversing former President and Republican rival Donald Trump’s 2017 tax law that slashed corporate tax rates from 35% to 21%. The move would raise the federal government by $1 trillion over a decade, budget experts estimate, but would hurt corporate profits, Wall Street says.
Large U.S. companies pay a much lower effective tax rate than their foreign peers, an average of 16%, a Reuters analysis found. Any broad changes to the corporate tax system would have to be passed by Congress.
CHILD TAX CREDIT
Harris has maintained Biden’s proposal to permanently restore an annual COVID-19-era increase in the child tax credit to a maximum of $3,600 per child, from $2,000 currently and expected to fall to $1,000 after 2025. She has also proposed a one-time $6,000 bonus credit for families with newborns.
Trump’s vice presidential running mate, J.D. Vance, has suggested increasing the annual child tax credit to $5,000, but the idea has not yet been adopted as an official Trump policy proposal.
Affordable housing
Harris has detailed plans to stimulate new construction and lower costs for renters and homebuyers, largely through tax breaks. They include tax breaks for builders of starter homes and affordable rental housing, along with a $25,000 tax credit to help first-time buyers with down payments over the next four years.
Harris is also proposing a $40 billion “innovation fund” to encourage local governments to build more affordable housing, doubling Biden’s budget proposal, which would provide competitive grants to local governments that demonstrate they can deliver.
According to real estate company Zillow, home prices in the U.S. have risen 50 percent and rents have increased 35 percent in the past five years, largely due to a housing shortage. Harris has set a goal of increasing U.S. housing construction by 3 million units over the next four years.
SMALL BUSINESS TAX CREDIT
Harris also deviated from Biden’s economic plan by proposing to increase the tax deduction for new small business startup costs from $5,000 to $50,000, to help entrepreneurs. America’s 33 million small businesses have accounted for 70% of the net new jobs created since 2019, according to data from the Small Business Administration.
CHILDCARE
“My plan is that no family, no working family, should spend more than 7% of their household income on child care,” Harris told the National Association of Black Journalists in September. American parents currently pay a whopping 19.3% of the median household income per child on child care, according to Department of Labor figures.
The 7% rate is consistent with the Child Care and Development Block Grant, a program Harris promotes that currently serves about 1 million children in low-income families.
Harris’ campaign has not detailed what the child care plan would look like.
HIGH GROCERY PRICES
Harris has promised to implement the “first-ever federal ban on food and grocery overpricing,” which would prevent big corporations from unfairly exploiting consumers while generating excessive profits. Defining such excessive price increases is unclear, but some proposals in the U.S. Senate show a possible path to implementation.
(Reporting by Heather Timmons and David Lawder; Editing by Jamie Freed and Jonathan Oatis)
