Kirsten Gillibrand chose Tim Walz to be her running mate. What does that choice say about her tax plans if she gets elected? Image: A MarketWatch picture illustration from Getty Images
Tim Walz, who is governor of Minnesota, has signed off on tax cuts for low-income families while raising family and business tax bills for wealthy people.
Sense a pattern? Voters who want to know where the Democrats on a new presidential ticket stand on taxes may feel like they’ve been here before.
Former President Donald Trump has talked about cutting taxes for people of all income levels. On the other hand, President Joe Biden, who ran against Trump in 2024, promised to raise taxes only on people who make more than $400,000 a year.
Biden dropped out of the race, and Vice President Kamala Harris took up his promise. However, there are still questions about the rest of her tax views. Now that she is the Democratic nominee, she has picked Walz to be her running mate. The election will take place one year before important parts of Trump’s 2017 Tax Cuts and Jobs Act expire.
Many people think that a presidential candidate’s choice of vice president is their first big decision. When it comes to taxes, Harris’s choice of Walz may make people even more sure that she is going to raise taxes on businesses and people with a lot of money.
A few experts say that Walz could help with the across-the-aisle pitch if a Harris White House needs to work out a tax deal with congressmen.
Harris and Walz talk about taxes in a lot of the same ways, at the very least. “I think they work well together on those issues,” said Henrietta Treyz, managing partner and director of economic policy at Veda Partners, a firm that does policy research for big investors.
They both have catchphrases that say the top of the tax code is too easy on rich people.
Trump, Walz said, “sat at his country club up in Mar-a-Lago, wondering how he can cut taxes for his rich friends.” This was Walz’s first speech as Harris’s choice for vice president. Harris said the next day in Detroit that Trump “plans to give tax breaks to billionaires and big corporations.”
Trump has promised “massive tax cuts for workers” and said he wants to keep the tax cuts from 2017 in place. Per the Associated Press, Trump said about his opponents at a press meeting on Thursday, “Between her and him, there’s never been anything like this.” “I don’t think anyone has ever been so liberal as these two.”
Take a look at what Tim Walz says about taxes.
In politics, words like “liberal” and “progressive” are often used interchangeably. But when it comes to taxes, “progressive” means one thing only: Which means that as people make more money, their tax rates go up.
It seems that both Walz fans and opponents agree that he is a progressive.
An official from the Tax Foundation, a think tank moving to the right, said that Walz had one of the most progressive tax records in the country while he was governor. He also said that was compared to people who have run for vice president before, like Pennsylvania Gov. Josh Shapiro.
Walczak said, “Gov. Walz stands out for his willingness to raise taxes multiple times when most states were cutting them.” He named tax hikes such as a 1% tax on high earners’ net investment income, a payroll tax that will go into effect in 2026 to pay for the state’s paid family and medical leave program, and rules that will bring in more tax money from foreign earnings for businesses.
It’s not often that vice presidents make decisions, Walczak said. “However, it’s interesting that Vice President Harris picked a big exception when it comes to state tax policy.”
People on the right, like Walczak, worry that if states’ taxes are too high, businesses and rich people may leave, taking their money and jobs with them.
A Tax Foundation study of Internal Revenue Service records shows that Minnesota lost a net 13,455 residents between 2021 and 2022, the year before big tax changes were made to the state’s biannual budget. These people brought $2.19 billion in adjusted gross income with them. Because of this movement, Minnesota became more like left-leaning states like California and New York, where people were leaving their homes in larger numbers.
Amber Wallin is the executive director of the State Revenue Alliance, a network of groups that wants wealthy taxpayers and companies to pay more in state taxes so that families and children can benefit. She doesn’t agree with the argument that taxes make rich people leave the state.
“Big picture: Minnesota’s tax system really is one of the best in the country when it comes to putting kids and working families first,” she said. She said that with a credit of $1,750 per child, Minnesota has the biggest state-level child tax credit in the country.
Wallin says Harris chose Walz because “he led tax reform in Minnesota that has helped make Minnesota one of the most progressive states in the nation.”
A think tank on the left called the Institute on Taxation and Economic Policy says that Minnesota is now one of six states where low-income people pay the least amount of state and local taxes compared to their income.
Tax history of Tim Walz as a congressman and governor
Before becoming governor of Minnesota in 2018, Walz served in the U.S. House of Representatives for six terms. Analysts at Bloomberg Intelligence say that he tacked center on taxes in the House. A note from senior government expert Andrew Silverman said that of the tax bills he co-sponsored, 91 were written by Democrats and 78 were written by Republicans.
It is clear that Walz and other Democrats did not vote for the 2017 Tax Cuts and Jobs Act. Most tax rates went down because of Trump’s tax cuts. The standard deduction went up and the child tax credit doubled to $2,000. It also cut the business income tax rate from 35% to 21% for good and doubled the estate tax exemption.
Last year was Walz’s big tax year as governor.
Family with low to middle income got a child tax credit of up to $1,750 per child. If an individual’s income is more than $29,500, and if a married pair filing jointly’s income is more than $35,000, the credit slowly goes away. Waldzak said that the credit is “notable for how targeted it is.” “It’s very kind to people with low incomes.”
Also, Walz lowered taxes for seniors by letting them deduct their Social Security benefits from their base income. Single people making less than $78,000 a year and married couples making less than $100,000 a year met the formula’s standard.
A lot of states already didn’t tax Social Security income, so this move “brings Minnesota more in line with most of its peers,” Walczak said.
Trump recently said that seniors shouldn’t have to pay federal income tax on their Social Security payments.
Under Walz, people who make more than $1 million in net business income now have to pay a 1% tax on it. In this group are interest, dividends, capital gains, rental and fee income, and more. People in Minnesota who make more than $220,650 a year also have fewer ways to lower their taxed income by taking standard or itemized deductions.
Walz: Was he practical or partisan? The head of the Minnesota Chamber of Commerce, Doug Loon, said he has seen both sides.
After the pandemic, the state’s trust fund for unemployment insurance was getting low at one point. Loon said that tax hikes might have happened if the share price fell below a certain level. Instead of raising taxes on companies, Walz worked with a divided legislature to add more money to the fund from COVID-19 relief funds that were left over.
“When that came up, he was able to make a deal.” “He has shown that he can do that even when politics are divided,” Loon said.
But Loon’s group and the business community fought against tax plans before the 2023 budget, when Democrats ran the state government, he said. This was especially true for the payroll tax. He said it was a tax on both workers and companies and could slow down work in a tight job market.
“There was no desire to try to find a middle ground.” “It was all about raising taxes to pay for higher spending,” Loon said.
He also said that was a worry because it was a “level of new spending that is unsustainable for the state’s long-term economic interests.”
You can only read so much into the tax tea leaves.
Jon Traub, managing partner at Deloitte Tax, said, “Don’t get too excited about looking through Walz’s tax record for clues about Kamala Harris’s possible future policies.”
“They have previously indicated that they would like a more progressive tax code,” he said. But “taxes probably played only a small part, if any, in why Vice President Harris chose Gov. Walz to be her running mate.”
With Harris in charge, Silverman’s note said it wasn’t clear how much power Walz would have. He might be “a moderating tax force,” though.
“I don’t think Walz will be a big deal in taxes in 2025,” Treyz said.
But Treyz said that if Walz gets to the White House, the former high school football coach might help find parts of the tax code where both sides can agree. Some of these are the future of the child tax credit and some clean energy credits. Walz could be “a helpful voice” in these areas.
She said that the two were already getting along because they were both willing to tax corporations and the rich to help families. “They are firmly aligned on this,” they say.
