Joe Biden, the presumptive Democratic presidential candidate, has chosen California Senator, Kamala Harris, as his running mate. Despite the fact that the Tax Cuts and Jobs Act benefited 9 out of 10 Americans, Harris is critical of the policy, and has expressed strong support of its repeal. The results of her action would affect the overwhelming majority of people, disrupting the current income tax rate, corporate tax rate and estate taxes.
The income tax rate under the TCJA ranges from 10% to 37%, with an additional surcharge of 3.8%, for net investment incomes of top bracket individuals, which would make the highest rate 40.8%. The proposed rate from Senator Harris ranges from 10% to 70%, and including the net investment income surcharge, would bring the highest tax rate to 73.8%. The corporate tax rate, which was lowered to 21%, thanks to the TCJA, would be raised to its original 35% under Harris’s plans.
For the estate tax, the TCJA increased the exemption amount to $11.4 million per person. The tax cuts also allows the beneficiary to claim the assets with a “stepped-up basis” equal to fair market value. In contrast, Harris appeared to support Sanders’ plan to call for a raise in estate tax ranging from 45% (starting at $3.5 million) to 77% (for anything valued at over $1 billion). This proposal would also eliminate the “stepped-up basis” rule upon death, which accelerates the collection of tax for the IRS, who would not have to wait for heirs to sell assets.
Though there is no telling of what is to be expected from the prospective nominees, it can be inferred that the current state of the tax code would be disrupted should Biden and Harris claim victory in the race for the presidency.