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Kamala Harris’ campaign strategy was to stipulate broadly how she would approach the presidency while remaining vague on policy details. To that end – and as of this writing – she hasn’t said much on taxes aside from raising the corporate tax rate and not taxing suggestions.
However, most experts agree that he will likely proceed and advocate most, if not all, of President Biden’s already declared tax policies, with an emphasis on raising taxes on wealthier individuals and corporations to finance his priorities and pay down the deficit.
As a certified public accountant, I see at least 10 significant ways a Harris administration could impact your personal and business tax bills. Let’s unpack.
Tips
Like her opponent, Harris was an advocate suggestions tax free policy addressed to employees of the service industry. Not only would this variation help businesses attract more staff, it could also allow employers to rely more on rewarding customers with suggestions somewhat than having to pay a higher wage. In addition to the lack of tax revenues from this plan, opponents of this measure they argue that this is discriminatory and may lead to corporate abuse unless there are very strict definitions of what qualifies as “tip” income.
Corporate tax increase
The current tax rate paid by C corporations is 21%. Harris recently defended increasing this indicator to twenty-eight%. Such a change would, in fact, result in an increase in taxes paid by corporations from this group. According to the Tax Foundation, a 28% corporate tax rate would depart U.S. corporations facing one such problem highest tax environments in the world.
Allowing the 2017 TCJA to run out
The Tax Cuts and Jobs Act of 2017 (TCJA) included many tax advantages for each large and small businesses, including reduced corporate, personal and property tax rates, incentives for R&D spending and investment in capital equipment, and significant direct transfer small business relief (qualified tax deduction profitable activities). However, many people are attempting to make some or all of the rules everlasting (or expand them); Harris was unclear what provisions, if any, it could support in the future.
Unrealized gains
President Biden and key Democrats resembling Bernie Sanders and Elizabeth Warren have long advocated a tax of as much as 25% on unrealized gains for people with greater than $100 million in assets and Harris leans forward also in this direction. Although there have already been arguments regarding the constitutionality of such a measure, a recent Supreme Court ruling opened the door to allowing such a tax. Taxing unrealized gains will involve regular and complex valuations of assets resembling art, real estate and other personal assets.
Increased enforcement
Under Biden 80 billion dollars allocated to the Internal Revenue Service to update its systems and improve law enforcement. Just last yr, IRS Commissioner Daniel Werfel announced publicly the agency intends to aggressively pursue mainly wealthy taxpayers (those earning greater than $400,000 a yr) and those that owe back taxes. Harris would likely not oppose these actions and may encourage or even propose more funding.
Increasing the child care tax credit
Like President Biden, Harris supported expanding the child care tax credit. Currently, assures as much as $2,000 per child under 17. She application is to extend this loan to $6,000. President Trump too proposes a raise for this loan as much as $5,000 per child. In addition to providing advantages to oldsters of young children, the credit can assist pay for additional child care services that will help employees miss work less often.
Increased capital gains tax
President Biden has proposed raising the tax levied on capital transactions (for example, sales of stocks, real estate and equipment) from the current rate of 20% to as much as 44.6%. While such an increase will surely increase tax revenues, some, like me, are concerned about the impact on business owners who buy and sell capital assets, in addition to those that make investments or plan to go out of business in the future.
Increased Medicare tax
Harris has expressed no opposition to her party’s support for increasing the current Medicare tax 3.8% to five% for people earning greater than $400,000 a yr.
New taxes on cryptocurrencies
The cryptocurrency industry has grown significantly over the past few years and has not escaped the attention of the federal government. In the past (*10*)budget proposalsPresident Biden has introduced a latest “cryptocurrency mining tax” and included cryptocurrency transactions in “sales” so that any loss on the sale of a crypto asset can only be realized if the same asset is not repurchased inside 30 days. So far, Harris has remained silent on these proposals.
An increase in tariffs in China
Both former President Trump and President Biden encouraged higher tariffs on imported Chinese goods. Earlier this yr, President Biden announced significant tariff increases on certain Chinese materials, including aluminum, steel, semiconductors and electric vehicles. Harris has not stated her position on the issue, although she will likely proceed to support these tariffs.
A Harris presidency – assuming congressional support – would almost definitely mean tax increases for many business owners, and definitely those that make greater than $400,000 a yr. Many people consider it might afford the raises and that the funds raised will help pay for its programs and hopefully reduce budget deficits.