The Billionaire Class Isn't Too Worried
In her CNN interview Thursday, Kamala stood with Biden on all of his worst policies, like Gaza and fracking. Let’s hope she also holds firm on the good ones. God knows she’s being pressured to change her stands on the bad stuff— and the good stuff. Right after the interview aired, Andrew Duehren and Theodore Schleifer reported that some of her big donors “are pushing her to reconsider supporting a proposed tax” on the super-rich. No one making under $400,000 a year would pay any higher tax rates. (As of 2022, the median household income in the United States was $74,580.) Between 1.8 and 2.0% of U.S. households have an annual income over $400,000— something like 2.6 million households… which happen to make up a disproportionately large share of the political donor class, giving them outsized influence over the political process and policy outcomes.
Wall Street and Silicon Valley money is pushing to get her to back away from the tax increases included in Biden’s final budget proposal that she announced last week she supports. “One of those plans would require Americans worth at least $100 million to pay taxes on investment gains even if they have not sold the stocks, bonds or other assets that have appreciated.”
Under the plan, those Americans would owe a 25 percent tax on a combination of their regular income, like wages, and so-called unrealized gains. The so-called billionaire minimum income tax could create hefty tax bills for wealthy individuals who derive much of their wealth from the stocks and other assets they own.
The proposal has hit a nerve with some of the donors who have flocked to supporting Harris after Biden dropped out of the presidential race, according to seven people familiar with the conversations.
Some have directed their complaints to the campaign’s advisers and top allies in the business community who are perceived to be in her inner circle. At least one top donor close to Ms. Harris has raised the issue with her in a private conversation, encouraging her to instead tax the ability of the ultrawealthy to borrow against their wealth.
Allies and staff of Harris have defended the plan to business leaders in private conversations, explaining that the tax would apply to only a small slice of wealthy Americans and could be delayed for investments that are not easily sold, according to the people familiar with the conversations.
Still, some donors close to Harris do not believe she is that committed to the idea. “In my interactions with them, the key is she focuses on her values and is not an ideologue about any particular program,” Mark Cuban, a billionaire and the former principal owner of the Dallas Mavericks basketball team, said in an interview. “From what I’ve been told, everything is on the table, nothing’s been decided yet.”
A campaign adviser said Harris supported the billionaires minimum tax but was open to alternative ways for substantially raising taxes on ultrawealthy Americans. Charles Kretchmer Lutvak, a spokesman for the Harris campaign, said in a statement that Ms. Harris believed in creating a more fair tax system.
“Vice President Harris believes billionaires and large corporations should pay their fair share in taxes, like everyone else,” he said. “They should have to pay a minimum tax rate because it’s not right that they pay a lower income tax rate than a teacher or firefighter.”
Aaron Levie, the chief executive of the cloud-storage company Box, who has put $30,000 into her campaign and said he plans to give more, said he and other Silicon Valley leaders he had spoken with saw the proposal as “quite punitive.”
“There’s optimism that this can’t possibly be real,” Mr. Levie said. “Most people are waiting to hear from the Harris campaign. Is this a real proposal that is actually being pushed for— or was this something that was inherited from Biden?”
Like Gaza; hope springs eternal. But even if we can’t be pretty sure Kamala won’t be breaking with AIPAC orthodoxy anytime soon, Duehren and Schleifer noted that “The pushback comes amid growing optimism among lobbyists and donors that Harris is adopting a friendlier approach to business concerns than Biden. Some have said privately that they feel that Harris’ policy positions are less set in stone than Biden’s were, allowing for outside pressure to be more effective. In her speech at the Democratic National Convention last week, Harris said she would create an ‘opportunity economy’ and provide support to entrepreneurs and ‘founders,’ a word in a carefully constructed speech that some attendees saw as targeted toward assuaging wealthy business leaders in Silicon Valley… Harris has also taken steps to better appeal to the crypto community, which has grown significantly more political and right-wing during the Biden presidency, and her campaign team has met with cryptocurrency executives, according to a person familiar with the conversations.”
The billionaire minimum income tax could be particularly costly for ultrarich tech executives who derive their wealth from owning slices of companies they helped start. Rather than selling their shares of companies, triggering taxes, those Americans can take out tax-free loans backed by the stock they own to finance their lifestyles.
The VCs for Kamala group— which includes [vicious anti-progressive fanatic] Reid Hoffman, a founder of LinkedIn; Vinod Khosla of Khosla Ventures; Ron Conway, a well-known investor; and the billionaire Chris Sacca— surveyed its members about various public policy issues. Roughly 75 percent of respondents agreed with the statement “taxing unrealized capital gains will stifle innovation,” according to a document viewed by the New York Times. The survey otherwise showed support for Harris’s agenda.
Investment income has long received preferential tax treatment in the United States, and taxing appreciation on unsold assets would represent a fundamental change in the tax code. Progressive Democrats see the ability of wealthy Americans to pay no tax on their unrealized capital gains as an unfair loophole, and Biden’s budget includes several other ideas that would change how investments are taxed.
Some progressives have so far said they are unworried about signs that Harris is adopting more moderate rhetoric about economic issues, maintaining that she has been a key partner in crafting Biden’s agenda.
The ambitious tax proposal would face an uphill climb on Capitol Hill, where Republicans and some Democrats are skeptical of changing how capital gains are taxed. That dynamic has helped ease some of the concerns on Wall Street about the idea, said Charles Myers, a fund-raiser for Harris and the chairman and founder of Signum Global Advisors.
“In my world, yes, I do hear about it and there is concern,” he said. “I think almost every person who would raise it as a concern understands that it would never pass Congress even if it’s a Democratic sweep.”
Myers said he had also heard concerns about some of the other tax proposals included in Biden’s budget, including raising the corporate rate to 28 percent from 21 percent and quadrupling a tax on stock buybacks to 4 percent from 1 percent. He expects that moderate Democrats in the Senate could sink some of those ideas, too.
Jeffrey Sonnenfeld, who studies corporate leadership at the Yale School of Management, said he had raised issues about taxing unrealized capital gains with members of Harris’s campaign team. He said the campaign did not want to publicly distance itself from the idea. “They don’t want to antagonize the populist support they need to get through the elections and make a big issue of it,” he said.
Those ideas and others will come into play next year, when Washington takes a fresh look at the tax code. Many of the tax cuts Trump signed into law in 2017 are set to expire after next year, and many Democrats want to both raise taxes on high earners and corporations and also extend tax cuts for middle-class Americans. Imposing the 25 percent minimum tax on Americans worth more than $100 million could raise roughly $500 billion in tax revenue over a decade, according to the Treasury Department.
There will never be a press release issued that she changed sides. It doesn’t happen that way in DC— and certainly not before an election. If you're looking for a transformational president— rather than just someone who can lead the Democrats to triumph over Trump— it may be a while. America missed its chance in 2016 and 2020 when Democrats allowed their party establishment to rig the system against Bernie. Looking at the media-anointed Democratic bench... I see a lot of lesser-evil type career politicians, not any transformational types.
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