Kamala Harris Wants To Tax The Ultra-Wealthy With Unrealized Gains Tax, Leaving Silicon Valley Unsettled

Democratic presidential nominee Kamala Harris has proposed a tax plan targeting the ultra-wealthy, causing a stir among Silicon Valley’s richest investors.

What Happened: Harris’ tax plan aims to raise nearly $5 trillion over a decade by taxing the unrealized gains of Americans with wealth exceeding $100mn.

This proposal, also part of President Joe Biden's 2025 federal budget plan, would significantly impact billionaires like Elon Musk, Warren Buffett, and Jeff Bezos, as well as successful startup founders and backers, the Financial Times reported on Friday.

Many tech investors have voiced their opposition, arguing that the tax would hinder innovation by penalizing high-performing start-ups. Marc Andreessen, co-founder of venture capital firm Andreessen Horowitz, warned that the tax could render start-up companies “completely implausible,” the report said.

The tax plan has also caused friction with wealthy donors backing Harris’ 2024 presidential campaign. Some have urged Harris to remove the tax proposals from her election manifesto, according to a New York Times report.

Despite the backlash, proponents argue that the tax plan addresses inequality in the US tax system, which currently favors income from wealth over income from labor. However, the proposal faces significant political opposition and potential legal challenges.

See Also: Wall Street On Wait-and-Watch Mode Ahead Of Nvidia Earnings

Why It Matters: The proposed tax plan is a continuation of the policies of the Biden administration, where Harris has played a key role. At the Democratic National Convention, Harris expressed her support for Biden's proposal to raise the federal corporate tax rate from the current 21% to 28%, a move that was met with disapproval from Wall Street.

The anticipated higher revenue from the tax rate hike is expected to fund economic proposals including a $6,000 tax credit for parents of newborns and the reinstatement of the pandemic-era expanded Child Tax Credit.

However, the tax plan has stirred up debate, with hedge-fund manager Bill Ackman proposing a “fair and practical” billionaire tax plan in response to Harris’ push to tax unrealized gains. Ackman suggested making borrowing an amount exceeding one’s basis in a stock taxable, as a way to address the issue of the ultra-wealthy avoiding income taxes.

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This story was generated using Benzinga Neuro and edited by Pooja Rajkumari