The Real Estate CPA – Nate Sosa, CPA, MST and their team reviewed Kamala Harris’s tax policies.
She will raise taxes on:
• Stock traders
• Business owners
• Wealthy individuals
• Real estate investors
• People earning >$100,000 per year
Here’s everything you need to know:
First, big s/o to @natesosa_CPA for reviewing Kamala’s voting and policy history.
— Brandon Hall (@bhallcpa) July 30, 2024
He put together a blog post where you can read more.
Give the man a follow if you want to be smart with your taxes.https://t.co/K4KNdeldoQ
Go here to see complete post: https://www.therealestatecpa.com/blog/kamala-harris-tax-plan
It is all but guaranteed at this point that Kamala Harris is slated to be the Democratic nominee in place of Joe Biden.
Impacts of the 2024 Election
In 2017, President Trump passed the 2017 Tax Cuts and Jobs Act, and the cuts have a major cliff or expiration approaching at the end of 2025.
Such items as the halving of the standard deduction, a return to 2017 tax rates, and the end of the qualified business income deduction will be coming if it is not extended.
This puts Kamala Harris in a very intriguing position should she win the candidacy and the election.
Will she follow President Biden’s stances, or venture out on her own policies?
Kamala’s Political History
Kamala’s first appearance in Capital Hill was in 2016 when she was elected senator for the state of California.
Kamala’s voting history with tax bills started with a resounding ‘no’ against the TCJA in 2017.
Since then, she has helped pass multiple bills, mostly those stemming from COVID relief in 2020.
She passed the Family Sick Leave Act, the CARES Act, the Paycheck Protection Flexibility Act of 2020, and the Consolidated Appropriations Act, which dealt with pandemic-era relief.
Kamala, as VP, was the tie breaker on the Inflation Reduction Act which provided many green energy tax credits and subsidies such as an increase to the ITC to 30%, the saleability of the tax credits, and making many tax extenders permanent.
What is intriguing is while she has co-sponsored many bills with Elizabeth Warren, she has never publicly endorsed a wealth tax which Warren is commonly known for.
She is indeed progressive, but as much or more so than President Biden?
Kamala’s Proposed Tax Package
Normally we don’t have much information from Vice Presidents as their job does not require forefront decisions.
However, Harris made some distinguishing points from herself and Biden during the 2020 Democratic Primaries.
Kamala’s most well-known package was the Livable Income for Families Today (LIFT) Act.
LIFT was meant to be a tax credit similar to the earned income tax credit but for families in the income range of $50,000-$100,000.
After that, the credit would no longer apply to anyone over that threshold and was meant to be phased out in the $50-$100k range.
This provision was estimated to cost approximately $3 trillion (Tax Foundationand Tax Policy Center) and was going to be paid for by repealing essentially all of the TCJA
This is interesting because traditionally Biden’s administration has put a line in the sand that they do NOT wish to remove those individual tax cuts on American taxpayers who make $400,000 or less.
More of Kamala’s Tax Plans
- Kamala Harris proposed a 4% Premium tax on taxpayers earning over $100,000 to fund Medicare For All, a policy criticized by Joe Biden during a debate.
- She suggested increasing the corporate tax rate from current 21% to 35%, higher than Biden’s proposed 28% in his 2025 Greenbook.
- Harris supported modifying transactions subject to capital gains rates to ordinary income rates for highincome filers.
- She advocated applying qualified dividends to ordinary income rates for high-income earners.
- Harris proposed raising the current 37% tax bracket to 39.6% for the top 1% of earners.
- She introduced a ‘transaction tax’ of 0.02% on stock transactions, 0.01% on bond transactions, and 0.002 on derivatives, a measure viewed negatively by many.
- Harris aligned with Biden on a rent control provision, proposing that landlords with more than 50 units cap rent increases at 5% or risk losing Low-Income Housing Tax Credits
All in all, Harris has shown herself to be a normal progressive on tax, with a few unique policies of her own as well.
She may gut the $400,000 threshold that has been put in place as of now and shake things up come tax cliff time.
However, Harris has not sounded off on everything. The failed Build Back Better Act also had intriguing provisions that Harris would likely have been the deciding vote on had Manchin and Sinema not rebelled against the party.
The BBB had provisions like:
- Significant changes to § 1061 and Carried interest rules
- A 4% tax (net investment income tax) on all active pass-through entities (differentiation as this used to apply to only passive investments)
- Make § 461(l) Excess Business Losses a permanent part of the tax code
How Does This Apply to Real Estate Investors?
While Harris doesn’t as of yet have any real policies that apply to real estate (other than showing support for rent control provision).
It can be seen that she will likely inherit a lot of Biden’s Greenbook policies and make them her own.
She will likely try to move forward with the policies that she expressed in the primaries in 2019, however, it is unclear how much or all of those will be applied.
Currently, the Greenbook contains a provision that applies a cap on the amount of deferral you can use with a 1031 Exchange (500k or 1 million). She may support and implement this policy if given the chance.
Additionally, Harris has shown disdain for the carried interest ‘loophole’ and would like to close it as well.
Currently, carried interests involving real estate are excluded, however, the Greenbook has substantial modifications to the carried interest that could affect real estate investors.
Harris has also shown the desire to let the TJCA provisions expire. This would include 100% bonus depreciation. Currently, the rate is 60%, but this will continue to drop 20% each year until it is 0% at the start of 2027.
Harris’s policies are broad and not necessarily ‘targeted’ towards investors. It can be inferred however that Harris will be looking to increase rates and provide more tax credits and incentives to housing and those who provide lower-income housing.
She also may look at repealing tax deferral strategies.
Conclusion
Over the next few months, The Real Estate CPA will be providing live updates on Trump’s tax plan and Kamala’s tax plan through our Presidential Tax Plan Tracker.
