A potential Trump nominee for U.S. Treasury secretary, who also happens to be a billionaire hedge fund manager, has explained how Vice President Kamala Harris’ tax plan could send markets into a quick plunge.
"In the early parts of her campaign, she was supportive of the tax on unrealized gain[s]. And if that was implemented, I think it would be devastating for the markets and cause a market crash," Paulson & Co. President and founder John Paulson said on "Cavuto: Coast to Coast," Monday.
"Harris says she wants to raise taxes on capital gains from 20% to 28%. The corporate tax rate, she wants to go from 21% to 28%, Paulson added. "But the one big one, she wants to tax unrealized gains."
The Trump ally previously joined Fox News on Thursday where he made the pitch to work alongside Elon Musk and cut the national deficit by $2 trillion.
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But if Harris were to win the 2024 presidential election, Paulson expressed fears over the macroeconomic implications of her tax policies, which include a 25% "minimum" tax on wealthy households and increasing taxes on capital gains and dividends for households making more than $1 million from 20% to 28%.
Unrealized capital gains taxes would be hiked to 25%, and policy advocacy group Americans for Tax Reform stated that the tax proposal, when paired with high state taxes, could lead to many Americans paying rates of more than 50% on income.
Paulson criticized this: "Generally, when you raise taxes across the board, that has a negative effect on capital and a negative effect on the stock market."
"All of Trump's proposed tax cuts basically benefit hardworking Americans, those who are suffering the most under the Biden administration. The problem is inflation has grown faster than real wages. So the average American is having trouble making ends meet. That's why a tax on tips, tax and overtime tax on Social Security, reducing taxes in those areas will benefit working families. But you could contain the costs by putting limits on it," Paulson explained.
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"By putting guardrails on these programs," he continued, "you can give the programs [and] benefit the Americans that need it most. And, at the same time, reduce the cost to the Treasury."
Though it’s hard to know the true impact of would-be tax plans, a new analysis from the nonpartisan Committee for a Responsible Federal Budget found the tax and spending plans offered by Vice President Harris would add about $3.95 trillion in additional debt over 10 years, and former President Trump would add $7.75 trillion to the national deficit in that same time frame.
FOX Business’ Eric Revell contributed to this report.
