(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 by leveraging of tax incentives and other tax shifts.
Some of her ideas build on unfinished business in President Joe Biden’s economic agenda, but expand their scope and scale.
Here’s what we know so far:
INDUSTRIAL INCENTIVES
Harris on Wednesday pledged new tax credits to spur more domestic manufacturing and invest in sectors that will “define the next century,” including biomanufacturing, space travel, artificial intelligence, quantum computing and blockchain, advanced nuclear energy and batteries.
She also said she would offer tax breaks for expanding “good union jobs” in longstanding iron, steel, coal and other traditional industrial communities. Details on the size and scope of the incentives and investments have not been 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 accelerate 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 reduce deliveries from China.
Harris has reiterated Biden’s pledge not to raise taxes on households making less than $400,000 a year.
She quietly approved most of the nearly $5 trillion in tax increases over the past decade in Biden’s 2025 budget proposal, which would raise the top income tax rate from 37% to 39.6%.
These include a new minimum tax of 25% on people with fortunes of more than $100 million, including on unrealized capital gains. For those earning more than $1 million annually, Harris has proposed raising the long-term capital gains tax rate paid after selling assets like stocks from 20% to 28%, an increase that is much smaller than Biden’s proposed full income tax rate of 39.6%. .
TAX ON BUSINESS
Harris has proposed raising the corporate tax rate to 28%, partially reversing former president and Republican rival Donald Trump’s 2017 tax law, which cut corporate tax rates from 35% to 21%. The move would save the federal government $1 trillion over 10 years, budget experts estimate, but would cut corporate profits, Wall Street says.
Large U.S. companies pay a much lower effective tax rate than their foreign competitors, an average of 16%, a Reuters analysis found. Any broad corporate tax change would have to be passed by Congress.
CHILD TAX CREDIT
Harris has maintained Biden’s proposal to permanently restore a one-year increase in COVID-19-era child tax credits to as much as $3,600 per child, from $2,000 currently, which is expected to drop to $1,000 after 2025. She has also a proposal for a One-Time Bonus Credit of $6,000 for families with newborns.
Trump’s vice presidential running mate, JD Vance, has proposed 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 encourage new construction and lower costs for renters and homebuyers, largely through tax breaks. They include tax breaks for builders of first-time homebuyers and affordable rental units, along with a $25,000 tax credit to help first-time homebuyers with down payments for the next four years.
Harris is also proposing a $40 billion “innovation fund” to encourage local governments to build affordable housing, doubling the Biden budget proposal that would provide competitive grants to local governments that demonstrate they can deliver results.
According to real estate company Zillow, U.S. home prices have risen 50% and rents have risen 35% 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.
TAX CREDIT FOR SMALL BUSINESS
Harris has also deviated from Biden’s economic plan by proposing increasing the tax deduction to $50,000 for the start-up costs of new small businesses, from $5,000 currently to support entrepreneurs. The 33 million small businesses in the U.S. were responsible for 70% of the net new jobs created since 2019, according to data from the Small Business Administration.
“My plan is that no family, no working family, should have to pay more than 7% of their household income on child care,” Harris told the National Association of Black Journalists in September. American parents currently pay as much as 19.3% of the average family income per child for care, according to figures from the Department of Labor.
The 7% figure reflects the Child Care and Development Block Grant, a program Harris has touted that currently supports about 1 million children in low-income families.
Harris’ campaign has not detailed how the child care plan would work.
HIGH GROCERY PRICES
Harris has pledged to implement the “first-ever federal ban on food and grocery price gouging,” which aims to stop big companies from unfairly exploiting consumers while generating excessive profits. Defining such excessive price increases is not clear, but some proposals in the U.S. Senate show a possible path to legislation.
(Reporting by Heather Timmons and David Lawder; Editing by Jamie Freed and Jonathan Oatis)
