When Vice President Kamala Harris endorsed $5 trillion in tax hikes outlined in President Joe Biden’s most recent budget proposal, she sparked a wave of unease among investors and other financial elites who said it tilted too far to the left.
By Jeff Stein
Amid the pressure, Harris’s campaign advisers debated dropping the proposal. But when she released a revised set of tax priorities last week, she kept the billionaire income tax. Instead, she modified another part of the Biden tax plan, calling for a more modest increase in the tax on capital gains for investors with more than $1 million in taxable income.
Since she suddenly became the Democratic presidential nominee barely a month ago, Harris has released, disavowed or refined a raft of policies — on health care, housing, child benefits and more — that begin to define her vision for the economy. The result, which blends left-leaning populism with more sympathy for industry, has led critics to accuse the campaign of scrambling to appease warring internal factions. But it also has drawn praise for taking a broader view than Biden’s of the American economy.
The tax move, for instance, was intended in part to signal to business leaders and centrist voters that Harris would listen to them if elected, while affirming her commitment to the party’s ambition to raise taxes on billionaires and corporations to pay for broad new social programs, according to the people familiar with the matter. (One adviser said the specifics of the tax plan were less important to Harris than finding a way to increase taxes on billionaires.)
“It’s an interesting combination of thoughtful wonkery, populism and a bit of sensible centrism thrown in,” said Jason Furman, who served as the top economist in the Obama administration.
Harris has dropped many of her most liberal positions from her 2020 Democratic primary campaign, while embracing new ones in two policy rollouts since becoming the nominee.
For those who view Harris as unfriendly to business, she has offered a more moderate approach on taxes and a plan to boost start-ups and foster entrepreneurship. Campaign advisers say encouraging more small businesses would be a core priority in a Harris administration.
Sen. Jeanne Shaheen (D-N.H.), the chair of the Senate’s Small Business Committee, praised Harris’s proposal on the issue, particularly through her proposed tax deduction and simplification of paperwork for small firms.
But in a nod to the party’s populist mood, Harris has called for a ban on price-gouging in the food and grocery sectors, a prohibition on corporate landlords using rent-setting algorithms and a $25,000 federal subsidy for first-time home buyers. Those policies are meant in part to resonate with voters who are angry over high housing and food costs and blame corporations for the surge in inflation coming out of the pandemic.
Harris has also pushed ideas that speak to Democrats’ technocratic policymakers, including measures designed to increase housing supply through new construction incentives and reduced government regulation, reductions to occupational licensing for start-up firms and a much larger child tax credit, which is seen as a popular policy and broadly supported by party economists.
“I think she’s not getting enough credit for being an astute technocrat,” said Ben Harris, who served as a senior Treasury Department official under Biden. “She’s a combination of populist concerns and a healthy dose of centrism, while trying to be fairly fiscally conservative and realistic by keeping her plans targeted.”
One person familiar with the matter, speaking on the condition of anonymity to reflect private conversations, stressed that the campaign’s policy decisions were being made by Harris’s staff, such as former Biden officials Brian Nelson and Grace Landrieu. A Harris campaign adviser said her plans “show she understands exactly who represents the backbone of our economy and who grows it: American workers and American small businesses.”
Not everyone has been impressed by the flurry of policy decisions emerging from the Harris campaign, though. Critics on the left and right see the vice president’s mash of policy ideas less as a grand unified vision than an effort to say just enough to beat former president Donald Trump.
After her price-gouging proposal was panned by economists, including former Obama officials, Harris allies suggested it would do little more than nationalize policies already in effect in many states. After Harris was criticized for not explaining how she would pay for her initial housing and child benefit plan — estimated to cost roughly $1.7 trillion over the next decade — campaign officials said she supports pursuing fresh tax hikes worth $5 trillion over the next decade, as outlined in Biden’s budget. When the business community expressed alarm at the scale of the tax plan, Harris backed off some of those measures.
This flurry of activity has provoked some unease. Three liberal policy advocates who support Harris, speaking on the condition of anonymity to share their candid thoughts, said they were troubled by the signal sent by her decision to pare back the capital gains tax under pressure from the investor class. Numerous economists have blasted her price-gouging and housing-subsidy plans as pandering to voters and said they could backfire. Conservatives accuse her of being wedded to Biden’s leftward push on economics — which they blame for exacerbating the worst inflation in four decades — and say she appears to be attempting a last-ditch effort to pivot from it.
“It’s not complicated: You have a San Francisco radical who believes in big-government socialism, who has a 3½-year record of ruining the economy. Her consultants have told her she has to move to the middle, so she’s trying to figure out things to do that somehow would make it work better,” said Newt Gingrich, the former House speaker who is an outside adviser to Trump. “You have to see all of it as a desperate effort to get away from the degree to which they’ll lose on the economy.”
Trump campaign adviser Brian Hughes has said Harris’s policies “rival some of the most socialist and authoritarian models from world history.”
None of those concerns will matter much to Democrats if Harris prevails on Nov. 5. A victory is likely to touch off a new conflict among the party’s opposing factions as Harris decides how to govern. For now, however, many are content to believe she is on their side of internal debates.
When asked whether he was troubled by Harris’s softening of Biden’s capital gains plan, Dean Baker, a liberal economist at the Center for Economic and Policy Research, a left-leaning think tank, suggested the campaign hadn’t given away anything substantial — because neither Biden’s tax plan nor Harris’s revised version is likely to pass Congress.
“I was laughing about it. She and Biden knew they weren’t going to get it,” Baker said. “She gave up nothing, and she got all these stories about how she’s ‘moderating’ and ‘listening’ to the business community.”
Cuban, the investor and Dallas Mavericks owner who has been vocally defending Harris on TV and social media, said on X that Harris “is listening to business people and getting their feedback on what’s fair.”
“Americans have been asking for a centrist candidate since [former president Barack] Obama,” Cuban said in an email. “She is firmly in the middle, with a dose of empathy that is reminiscent of Obama I think that is resonating with voters.”
