Democrats say Harris' decision to moderately raise capital gains taxes on the wealthy is a step in the right direction to win over voters who worry she is too liberal or too hostile to business.
The Trump campaign has portrayed Harris as a liberal firebrand, pointing to the various positions she took during her 2019 presidential run while courting liberal supporters.
In the weeks since becoming the Democratic nominee, Harris has moved more to the center, particularly distancing herself from her 2019 call for a ban on fracking, a key issue in the battleground state of Pennsylvania.
Democratic strategists say Harris is needed to counter attacks from former President Trump, and her proposal to raise capital gains taxes on people with taxable income to 28 percent instead of the 39.6 percent supported by the Biden administration is welcome news.
Democratic strategist Anthony Corey said the new proposal underscores that Harris is not the progressive some in the GOP have portrayed her as, and while he said she has received mixed reviews from within his party, it's a signal to the business community that “she gets it.”
“This announcement sends a message to the business community that she's not the villain the right is making her out to be, and in some ways that's more important than policy,” Cawley said.
But some Democrats say Harris should have proposed a lower tax rate or taken other steps to differentiate.
“I don't know who's going to be happy,” one prominent Democratic donor told The Hill in an interview. “My guess is the business community will say, 'Why bother with capital gains?' Progressives' view is, 'Why give them an exemption from the Biden plan?'”
“I don't know who she's doing it for,” the donor added.
The second donor added that the economic plan is not the one that will appeal most to voters, but acknowledged that it is a difference from President Biden.
“I wouldn't have spearheaded this,” the donor said. “It's not going to lower prices, it's not going to put a cent in people's pockets. If the whole point is to say she's on a different path than Biden, well, she is.”
“But other than that, there's not much else,” the donor added.
Ms. Harris has also faced pressure from the left, which has so far remained relatively silent as she has moved toward the center. Progressives have generally indicated they are willing to cut her some slack when it comes to the election, because they believe it is important for Mr. Trump to lose.
Democratic strategist Rodell Molyneaux acknowledged that the practical objective of winning the election now supersedes policy priorities.
“We're in campaign mode. It's about what you want, what you say and what's reality,” he said.
Democrats have taken a conciliatory stance, saying the tax proposal strikes an acceptable balance between various priorities.
“Vice President Harris is trying to strike a balance between raising revenue responsibly and fairly and supporting investment and the realities of Congress, and I think 28% is getting it,” Rep. Don Beyer (D-Va.) said in a statement to The Hill.
Although raising capital gains taxes would take money out of investors' pockets, not everyone in the financial industry thinks it's a bad idea.
“The taxes we're dealing with are already a kind of tax cut for taxpayers,” David Au, head of tax and estate planning at Alta Finance, told The Hill. “Congress and the government only have to tax us at our normal tax rates, but capital gains tax is already a tax cut for us.”
Oh added that the familiarity of the previous 28% capital gains tax may give the system more appeal: Currently, the top capital gains tax rate is 20%, but there could be an additional 3.8% tax on income above a certain threshold.
“They're going with 28 percent because we're creatures of habit, and 28 percent is something we've seen before. We've seen it in the late 1980s and early 1990s,” Oh said.
Harris has released several other proposals related to the economy this week, and a source close to her campaign told The Hill that the campaign plans to announce endorsements from a range of business leaders this week.
Harris has proposed a plan to increase the tax credit for startups from $5,000 to $50,000 and provide low- or no-interest loans to small businesses looking to expand, as well as a form of standard deduction designed for small businesses.
“We're going to increase federal contracting with small businesses,” she said.
Large portions of the U.S. tax code are set to expire at the end of next year, and the outcome of the November election will determine how or if those expirations are treated. Capital gains taxes are less significant from a revenue perspective than changes to income tax rates, but they could still affect the level of U.S. debt and the budget deficit.
