As election day quickly approaches, presidential candidates have been getting further in the weeds regarding their stances on important policies that they believe will help improve the well-being of Americans.

Former President Donald Trump has been proposing many key policies regarding the economy, border control, and national security while on the campaign trail. Vice President Kamala Harris, who became the Democratic nominee over a month ago after President Joe Biden dropped out, hasn’t been so eager to go in depth on all of the policy proposals of hers.

This is evident in the fact that her campaign website doesn’t feature a platform section on it. But when Harris has been vocal about pitching an idea to help fix the issues plaguing Americans, it’s been met with criticism not only from the Right, but also from some members of the Left.

And that’s exactly what happened when Rep. Ro Khanna (D-CA) heard about Kamala Harris’s call to unleash a tax on unrealized capital gains, a plan that’s included in President Biden’s budget for the 2025 fiscal year.

Khanna Pushes Back On Harris’s Tax Plan

“Let’s say you’re an entrepreneur, you create a company, it gets to $100 million or $200 million on paper. Now if you’re taxing that, you’re probably going to force that person to sell it,” Ro Khanna said in an interview on CNBC’s “Squawk Box.” Representing Silicon Valley, one of the wealthiest districts in the country, Khanna’s warning holds particular weight given his deep ties to the startup ecosystem. “Do you really want the entrepreneurs to be forced to sell their companies to larger institutions and to decline in value? I don’t think that’s what you want for a startup ecosystem,” Khanna continued. He avoided naming Harris directly but his comments clearly referenced her support for Biden’s plan.

Currently, capital gains taxes are imposed after the sale of an asset, allowing wealthier individuals to increase their net worth as the value of their holdings grows over time. This stands in contrast to traditional income, which is taxed on a yearly basis. One common tactic used by the wealthy to navigate the current tax structure is referred to as “buy, borrow, die.” This strategy allows individuals to borrow money against their growing assets without triggering taxes on unrealized capital gains, thus avoiding immediate taxation.

Many progressives argue that the current capital gains tax system lets the rich escape their fair share of taxes. But while Khanna acknowledged their concerns, he emphasized that taxing unrealized gains isn’t the solution. “I get why” many of his Democratic colleagues want to collect more from the wealthy, he said, before adding: “This is not the right way to do it.” Khanna further pointed out the high-risk nature of startup investments. “90, 95% of investments in startups fail,” he noted, warning that such a tax would discourage investment in early-stage companies. As an alternative, he suggested taxing the loans wealthy individuals use to avoid paying capital gains tax, rather than taxing the unrealized gains directly.

There’s also the concern that the federal government will, eventually, abuse the unrealized gains tax to continue to expain it’s always skyrocketing budget. Some experts have noted that, back in the 19th century, the federal government was run on a shoestring budget compared to today. When the income tax was originally introduced, it was only supposed to be temporary and a tax on very few Americans. It didn’t take long for the federal government to start abusing that new form of taxation.

“Don’t worry, taxes on unrealized gains will only apply to the top 2%”

In 1861, Congress passed the first income tax: 3% on citizens making $800 or more.

Only 3% of the population at the time made more than $800 a year. ($28,123 in today’s dollars)

It expanded. pic.twitter.com/DJnvfwiwKH

— Whole Mars Catalog (@WholeMarsBlog) August 20, 2024

Just hours after Khanna’s remarks, Vice President Harris endorsed a top rate of 28% on long-term capital gains for individuals earning at least $1 million per year. Currently, the highest capital gains tax rate is 20%. This proposal fits within President Biden’s broader fiscal vision for 2025, which includes policies that, according to some analyses, would tax capital gains at rates as high as 44.6%. This figure is based on Biden’s aim for a top rate of 39.6%, combined with a 5% tax on investment income.

“Billionaires and big corporations must pay their fair share in taxes,” Harris proclaimed at a rally in New Hampshire. “It’s just not right that those who can most afford it are often paying a lower tax rate than our teachers and our nurses and our firefighters.”

Harris also positioned her approach as beneficial for small businesses and innovation. “We will tax capital gains at a rate that rewards investment in America’s innovators, founders, and small businesses,” she said. Her plan, described as a “billionaire minimum tax,” comes alongside a proposal to expand the startup expense deduction from $5,000 to $50,000. “When the government encourages investment, it leads to broad-based economic growth,” Harris told the crowd, emphasizing the importance of job creation in strengthening the economy.

Leftist Division Could Lead to Potential Election Defeat

Kamala Harris’s stances on economic policies have largely been a swing and a miss thus far. Former President Trump has deemed many of them to be communist in nature and predicted they would lead to another Great Depression. And while some Democrats may think that Trump is being hyperbolic, other Leftists can’t help but agree with Trump that Harris needs to adjust her economic platform before Americans go to cast their ballots on election day.

If a Leftist like Ro Khanna thinks your economic policy proposal is too far out there, then it might be time to switch things up. Otherwise, disagreements and division are being sowed within the Democrat Party before a major election.

We’ve already seen the Left become divided over the Israel-Hamas conflict, so adding economic issues on top of that division would only make things more tumultuous for them. And if Kamala Harris really wants to prove that she has the best interest of business owners at heart, then she should take Khanna’s advise and think about ditching the idea of a tax on unrealized capital gains.

What do you think? Should Harris listen to Khanna’s advice on this issue? Would her plan to tax unrealized capital gains benefit or hurt Americans? Let us know down in the comments below!