Prominent Donors Urge Harris to Abandon Capital Gains Tax Plan

Vice President Kamala Harris is facing pushback from her own donor base over a controversial tax proposal.

Originally introduced by President Joe Biden, the proposal aims to levy a 25% tax on unrealized capital gains for individuals worth $100 million or more, and the policy has ignited concern among wealthy Harris donors and economic analysts over its potential economic repercussions and political feasibility, with some telling her to reverse course, as the Daily Caller reports.

Harris, aligning with Biden's broader economic strategies, has expressed support for various tax increases outlined in the proposed $5 trillion budget for 2025.

Among these, the tax on unrealized capital gains stands out due to its significant impact on wealthy individuals and investors.

Internal Opposition and External Skepticism

Notably, several influential donors to the Harris campaign have voiced their dissatisfaction, urging her to reconsider or even discard the policy. These donors argue that the proposal could undermine economic stability and dampen political support for Harris in future elections.

Aaron Levie, CEO of Box, reflected a common sentiment among skeptics, questioning the seriousness of the proposal.

"There’s optimism that this can’t possibly be real. 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?" Levie commented.

Harris Campaign Defends the Tax Proposal

In response to the growing criticism, Harris campaign spokesman Charles Kretchmer Lutvak defended the proposal, emphasizing its aim to ensure billionaires pay their "fair share" in taxes.

"The policy was to get billionaires to pay a ‘fair share’ in taxes," Lutvak stated, aligning the tax initiative with broader efforts to address income inequality.

Despite the backlash, some within Harris’ circle believe she might adopt a more flexible approach compared to Biden. This belief stems from her previous policy positions, suggesting she could potentially adjust or phase out the proposal depending on broader political pressures and feedback from economic advisors.

Silicon Valley Shows Mixed Reactions

The proposal has also sparked reactions from over 100 Silicon Valley investors under the "VCs for Harris" group, which includes prominent figures like Mark Cuban, Reid Hoffman, and Vinod Khosla.

While they have shown general support for Harris, an internal survey revealed that about 75% of these investors think taxing unrealized capital gains could negatively affect innovation.

Public finance economist E.J. Antoni harshly criticized the proposal, calling it unrealistic and a poor reflection of economic principles. "This [proposal] is beyond insane. This proposal by Harris’ handlers would literally force people to sell off a portion of their investments every year to pay the taxes due on unrealized gains," Antoni explained, emphasizing the speculative nature of unrealized gains.

Broader Implications for Innovation and Investment

Charles Myers, a voice within the financial sector, echoed a prevalent concern among Harris' affluent supporters. “In my world, yes, I do hear about it and there is a concern. 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 noted, highlighting the legislative challenges ahead.

The debate surrounding the Harris tax proposal encapsulates a broader discussion about tax reform and wealth distribution in the United States. As the vice president navigates these contentious waters, the reactions from various sectors will likely shape her policy trajectory and possibly her political future.