As the Democratic nominee for the White House in November, Kamala Harris has begun to shape her policies with a view to a possible promotion from vice president to president.

Monetary policy has been a major theme in the current presidential campaign, with Harris and her Republican opponent pushing for different tax policies to win over voters. Now that Harris has officially accepted the nomination for November, Newsweek has investigated what Harris wants to achieve with her tax policy.

What are Harris’ main tax plans?

The fiscal policy measures announced by Harris so far in her campaign include raising the corporate tax rate, abolishing the tax on tip income and expanding the current child tax allowance provisions.

“Harris’ proposals largely built on Biden’s economic platform, with a focus on creating tax benefits for middle-class and low-income Americans while raising taxes on corporations and the wealthy,” John Gimigliano, head of tax legislation services at KPMG US, told Newsweek. “Nevertheless, Vice President Harris managed to put her own stamp on the tax issue with some new ideas that seem inspired by candidate Harris’s 2019 proposals.”

“Together, we will build what I call an economy of opportunity,” Harris told her supporters at a campaign rally in North Carolina. “Building the middle class will be a critical goal of my presidency because I firmly believe that America is strong when the middle class is strong.”

Corporate tax increase

Harris has proposed raising the corporate tax rate from 21 percent to 28 percent. Trump had introduced a uniform corporate tax rate of 21 percent as part of the TJCA. Under his Democratic predecessor, Barack Obama, the rate was 35 percent.

Harris campaign spokesman James Singer said the move was part of a “fiscally responsible way to put money back into the pockets of working people and ensure billionaires and major corporations pay their fair share.”

When current President Joe Biden made the same proposal in his 2025 budget, the Tax Foundation estimated that a 28 percent increase would raise $1 trillion over fiscal years 2024 to 2034. The Penn Wharton Budget Model projects it would raise $1.2 trillion over the same period.

Tax increases over $400,000

Like President Biden, Harris has promised not to raise taxes on people earning less than $400,000 a year. Harris has proposed raising the top tax rate to 39.6 percent from the current 37 percent.

No taxes on tips

Harris followed her opponent Trump and announced in August that she supported eliminating federal income tax on service workers’ wages. During a speech in Nevada, the same state where Trump announced his policies, Harris said, “If I am president, we will continue our fight for America’s working families, including by raising the minimum wage and eliminating the tax on tips for service and hospitality workers.”

“Harris’ ban on taxing tips will greatly benefit small businesses, especially in the food industry,” said Javier Palomarez, founder and CEO of the United States Hispanic Business Council Newsweek“For some restaurants, tips make up the majority of their employees’ income. When that money isn’t taxed, employees keep more money in their pockets, which in turn increases the restaurant’s ability to attract and retain employees.”

However, the Tax Foundation points out that such a policy could also have disadvantages, as it could “increase the complexity of tax law” and also lead to significant revenue losses for the federal government.

“A tip exemption would not be targeted at low- and middle-income earners, given the relatively small share of the population that works in tipped occupations,” the foundation said in a recent analysis. “Worse, the exemption itself and any additional protections would add even more complexity to the overall tax code. Depending on how it is designed, an exemption could cost about $100 billion over the course of the 10-year budget period.” Newsweek The Vice President’s campaign team has asked for comment via email.

The Committee for a Responsible Federal Budget has predicted that such a policy “would reduce federal revenues by $150 billion to $250 billion over a ten-year period, using static values. Revenues could be reduced even more when behavioral effects are taken into account.”

Extension of the child tax allowance

Harris plans to reinstate the expanded child tax credit that was offered during the coronavirus pandemic. In 2021, the Biden administration increased the child tax credit from $2,000 to $3,600 per child as part of the American Rescue Plan Act. Harris’ plan goes a step further, giving families with newborns a total of $6,000 during the baby’s first 12 months.

“We will give families a $6,000 tax credit in the first year of a child’s life,” Harris said during a political speech in Raleigh, North Carolina.