Harris and the DNC gave us an Orwellian picture of the future at the Democrat National Convention. Massive taxation ($5 TRILLION in crippling wealth transfers aka taxes). Of course, the top 1% will bear the brunt of the new taxes.

Kamala Harris’s tax increases include:

Small business tax rate hike to 39.6%

Small business owners pay business taxes on their individual tax return. The Harris endorsed budget raises the top marginal income tax rate to 39.6% from the current 37%. 

Corporate tax rate higher than the EU and communist China. 

Kamala Harris wants to hike the current 21% federal corporate income tax rate to 28%, higher than communist China’s 25% and the EU average of 21%, her campaign said Monday.

The Kamala Harris federal 28% rate is higher than the Asia average corporate tax rate of 19.8%, the EU average of 21%, the world average of 23.5%, and the OECD average of 23.7%. (See the Tax Foundation’s comprehensive listing here.)

The Harris federal 28% rate is also higher than Canada (26.2%), the UK (25%) Sweden (20.6%), and even Russia (20%), Afghanistan (20%), and Iraq (15%).

After adding state corporate income taxes, the combined federal-state tax burden in most states will easily exceed 30% under the Harris plan. 

The Harris rate hurts the USA vs. China with its 25% rate. And note: Industry sectors of strategic use to the Chinese government pay an even lower rate of 15%.

American workers will bear the brunt of Harris’s corporate tax increase.

The non-partisan Joint Committee on Taxation affirmed in congressional testimony that corporate tax rate hikes hit “labor, laborers.” A study compiled by the Tax Foundation found that “labor bears between 50 percent and 100 percent of the burden of the corporate income tax, with 70 percent or higher the most likely outcome.”

Capital gains and dividends tax more than twice as high as communist China

Here is a direct quote from the Biden-Harris budget: “Together, the proposals would increase the top marginal rate on long-term capital gains and qualified dividends to 44.6 percent.“

Yes, you read that correctly: A Kamala Harris capital gains and dividends tax rate of 44.6%

China’s capital gains tax rate is 20%. Is it wise to have higher taxes than China?

Under the Harris plan, the combined federal-state capital gains tax exceeds 50% in many states. California will face a combined federal-state rate of 57.8%, New Jersey 55.3%, Oregon at 54.5%, Minnesota at 54.4%, and New York state at 53.4%.

Unconstitutional wealth tax on unrealized gains

The Harris-endorsed budget calls for an annual 25 percent minimum tax on the unrealized gains of individuals with income and assets exceeding $100 million. Once in place, it won’t be long before the threshold is lowered to hit more and more Americans.

Americans overwhelmingly oppose taxes on unrealized gains, by a factor of three to one, including 76% of independents. Americans know that a “gain” isn’t “real” until it is actually realized, in hand.

This Harris tax is similar to the wealth taxes pushed by radical progressives such as Sens. Elizabeth Warren (D-Mass.) and Bernie Sanders (I-Vt.).

Capital gains taxes should only be paid when a gain is realized. Harris’s wealth tax would break with current tax policy and impose tax Americans based on the value of an asset on a particular arbitrary date.

This unprecedented tax would give even more power to the IRS, encourage taxpayers to move assets overseas, and will only expand to hit millions of Americans over time. 

A second Death Tax by taking away stepped-up basis when parents die

Harris wants to impose a second Death Tax by taking away stepped-up basis when parents die. This would result in a mandatory capital gains tax at death — separate from, and in addition to — the current Death Tax.

This will impose a steep tax increase and paperwork nightmare for small businesses, farms, and families. 

The Biden-Harris administration has been pursuing this for a while. In a piece titled “This Biden Tax Hike Hike Will Hit Mom & Pop Hard” tax lawyer Robert W. Wood writes:

Under current tax law, assets that pass directly to your heirs get a step-up in basis for income tax purposes. It doesn’t matter if you pay estate tax when you die or not. For generations, assets held at death get a stepped-up basis—to market value—when you die. Small businesses count on this.

Wood notes the “proposal would tax an asset’s unrealized appreciation at transfer. You mean Junior gets taxed whether or not he sells the business? Essentially, yes. The idea that you could build up your small business and escape death tax and income tax to pass it to your kids is on the chopping block.”

As reported previously 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. 

Harris’s 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.“

Global tax cartel with 21% minimum tax rate

Harris wants to yoke the U.S. to an international tax cartel and impose a 21% global minimum tax on American businesses. This would be a devastating blow to U.S. competitiveness and sovereignty and eliminate healthy tax competition between countries. 

The Biden-Harris administration has for years pursued a misguided international tax regime under the control of the Paris-based Organisation for Economic Co-Operation and Development (OECD). The OECD wants to stamp out tax competition. 

Harris’s plan would go well beyond the OECD’s framework for a 15% global minimum tax and instead increase the rate to 21%. And the tax rate will only go up from there since bloated governments won’t have to compete. 

Donald Trump had wisely kept the U.S. away from the tax cartel.

Quadrupled tax on stock buybacks — a Harris tax that will hit every American with a 401K or IRA or union pension

Democrats imposed a 1% stock buyback tax in the misnamed Inflation Reduction Act. Now, the Harris endorsed budget calls for quadrupling the tax, the burden of which hits every American with a 401k, IRA, or union pension.

A record share of 401(k) account holders took early withdrawals from their accounts last year for financial emergencies including preventing foreclosures, evictions and paying medical and tuition bills, according to the Wall Street Journal. 

Raising taxes and restricting buybacks would further harm the 58 percent of Americans who own stock and more than 60 million workers invested in a 401(k). An additional 16.14 million Americans are invested in 529 education savings accounts.

Quadrupling the buyback tax, would stifle U.S. employers and put Americans at a competitive disadvantage vs. China, which does not have a buyback tax.

30% federal excise tax on electricity used in cryptocurrency mining

The Harris-backed budget imposes a 30% excise tax on the cost of electricity used to mine digital assets. The Treasury Department’s claims that mining has “negative environmental effects and can have environmental justice implications as well as increase energy prices.” Another excuse to raise taxes. It also neglects the fact that private sector innovation is already reducing any preexisting de minimis emissions by switching to “proof of stake” instead of “proof of work” consensus mechanisms.

Applies the wash sale rules to digital assets

The Harris-backed budget would apply the wash sale rule to digital assets. Under current IRS rules, a wash sale occurs when an investor sells “stock or securities” at a loss, and either 30 days before or after the sale, purchases a “substantially identical” stock or security. The IRS prohibits the deduction of losses when a wash sale occurs. The Joint Committee on Taxation (JCT) estimates that this change would increase the tax burden on digital asset transactions by roughly $17 billion.

$37 billion tax on American energy

The Harris-endorsed budget calls for a host of new taxes on oil and gas companies totaling $37 billion. This includes the repealing of expensing for intangible drilling costs (IDC), the use of percent depletion for oil and gas well and additional excise taxes on crude oil production. These tax hikes will be passed on to consumers in the former higher gas prices and energy bills. This tax hike on American energy comes on the heels of Democrats passing roughly $20 billion worth of new energy taxes included in the Inflation Reduction Act.

32% increase to Medicare taxes

Harris endorsed raising Medicare taxes from the current rate of 3.8 percent to 5 percent for individuals making over $400,000 per year, roughly a 32 percent tax hike. The plan reportedly broadens the Net Investment Income Tax (NIIT) to apply to non-passive business income and Harris would also increase the hospital insurance (HI) payroll tax from 0.9 percent to 2.1 percent for individuals earning over $400,000.

Carried interest tax on capital gains

Harris would tax carried interest as ordinary income for individuals earning over $400,000. While the Left labels carried interest as a “loophole” it is actually based on longstanding tax principles. Raising taxes on carried interest capital gains should be rejected. It is a terrible tax policy that would harm economic growth, reduce jobs, and reduce the returns of public pension funds across the country.

Even Sen. Kyrsten Sinema (I-Ariz.) rejected Democrats’ attempt to raise taxes on income from carried interest by blocking this proposal from being included in the Inflation and Reduction Act.

This tax hike would hit private equity, venture capital, real estate partnerships, and their portfolio companies which together account for over 25 million American jobs. In response, firms would downsize and decrease investment, causing both a loss of jobs and a reduction in the returns investors see.

$24 billion retirement tax

The Harris proposal calls for capping the retirement plan benefits of certain individuals. The White House projects this limitation on retirement benefits will raise $24 billion in taxes from individuals with retirement account balances above $10 million and earnings above $400,000.

Real estate tax hike on Like-Kind exchanges

Harris backs raising taxes on capital gains from real estate transaction by limiting what are knows as 1031 Like-Kind Exchanges to $500,000 in gains.

Under current tax rules, real estate investors can exchange real property used for business for similar real property and defer capital gains tax. Harris’s proposed changes to this tax treatment will hurt individuals and farmers.

An even further-supersized IRS

If you thought Harris and congressional Democrats had already supersized the IRS enough, think again. The Harris budget plan shovels another $104.3 billion to the agency. 

Erodes taxpayer rights by making it easier for IRS agents to stack up questionable penalties against taxpayers

Last year the Biden-Harris IRS got caught illegally backdating penalty documents and signatures in U.S. Tax Court in order to run up the bills on taxpayers. The court caught the IRS lying. U.S. Tax Court is generally very deferential to IRS neglect but in this case the court was rightly furious.

While testifying to congress in late 2023, IRS Commissioner Werfel declined to say whether anyone has been fired for this practice. It is suspected the backdating incident was not an isolated occurrence within the IRS. Another indication that the IRS has a severe accountability problem that is only going to get worse.

Due to reforms enacted by Republicans in 1998, IRS agents are currently required to get written approval from their immediate supervisor before imposing penalties on taxpayers. This is designed to protect taxpayers from agent chicanery. 

Congressional investigators discovered years of abuse by IRS agents running up the penalty score as an intimidation tactic against taxpayers. Agents would use the threat of penalties as a bargaining chip. The IRS has a history of targeting people who do not have the means to fight back, and unethical agents at employee review time could point to all the penalties they imposed on people who perhaps did not deserve it. So, in 1998 congressional Republicans enacted a taxpayer protection (Section 6751) which requires agents to get personal written approval from their immediate supervisor before sending written penalty letters to taxpayers.

But the Biden-Harris budget allows IRS agents to shop around for sympathetic supervisors anywhere in the building. Harris also wants to scrap the written approval requirement altogether for many penalty scenarios. Agents will abuse this and taxpayers will be the victim. 

From the Biden-Harris budget: “In addition, the proposal would expand approval authority from an ‘immediate supervisor’ to any supervisory official, including those that are at higher levels in the management chain or others responsible for review of a potential penalty.”

Won’t be long before agents just go directly to the taxpayer-hostile supervisor on, say, the fourth floor who will sign off on anything. Good luck to taxpayers without the resources to defend themselves in court against an agency with a near-unlimited budget.

Of course, what will the new taxes be spent on? That is REALLY scary. Healthcare for illegal immigrants? Wealth transfer to large donors??

Well, it is already getting nasty on the employment front with jobs transitioning to unemployment at a rapid rate.