Kamala Harris plans to increase the U.S. corporate tax rate to 28 per cent if she wins the White House in November, aiming to boost government revenues from corporate America—a move likely to face opposition from the business community.
Harris’s campaign announced on Monday that she intends to uphold the proposal first introduced by President Joe Biden, which would raise the corporate tax rate from 21 per cent to 28 per cent.
This announcement comes as Harris outlines her economic agenda ahead of formally becoming the Democratic presidential nominee at the party’s convention in Chicago this week.
Her proposed tax plan for businesses stands in stark contrast to that of her opponent, Republican candidate Donald Trump, who has pledged to cut the corporate tax rate to 15 per cent. Harris’s plan would result in a corporate tax rate higher than the UK’s 25 per cent, making it one of the highest among advanced economies.
A Harris campaign spokesperson commented, “Unlike Donald Trump, whose extreme Project 2025 agenda would drive up the deficit, increase taxes on the middle class by $3,900, and send our economy spiralling into recession, her plan is a fiscally responsible way to put money back in the pockets of working people and ensure billionaires and big corporations pay their fair share.”
Harris recently pledged to cut taxes for the middle class, provide incentives for first-time homebuyers, and crack down on price-gouging by food and grocery companies, all in an effort to address cost-of-living concerns among voters.
While an increase in the corporate tax rate could generate additional revenue for the U.S. government, Harris did not specify how these funds would be allocated.
Her commitment to Biden’s goal of raising the corporate tax rate comes ahead of an anticipated congressional battle next year over the expiration of the tax cuts enacted by Republicans in 2017. These cuts lowered the corporate tax rate from 35 per cent to 21 per cent, and the outcome of the negotiations will depend heavily on which party controls Congress after the presidential election.
Despite the reduction in the corporate tax rate following the 2017 tax reform, corporate tax receipts are currently higher, partly due to rising profits. The Business Roundtable, a corporate lobbying group, has credited Trump’s 2017 tax reform with bringing $2.5 trillion in international earnings back to the U.S. and has urged lawmakers to maintain a corporate income tax rate of “no more than 21 per cent.”
However, unless Democrats regain control of the House of Representatives and maintain their hold on the Senate, Harris may face significant challenges in securing an increase in the corporate tax rate due to Republican opposition in Congress.