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Harris goes quiet on Biden’s push to tax unrealized gains

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Vice President Kamala Harris has gone silent on Democrats’ bid to tax unrealized investment gains — casting doubt on how strongly she’d push for a key plank of the party’s efforts to raise taxes on billionaires.

Harris, who has already pledged to scale back one of President Joe Biden’s key policies on capital gains taxation, is declining to give specifics about her support for other pillars of the administration’s vision to raise taxes on businesses and the wealthy. That includes a White House plan to tax unrealized gains, a major proposed Internal Revenue Code change designed to increase levies on the richest Americans who are often able to avoid taxes under the current rules.

The Democratic nominee still supports a billionaire minimum tax, a campaign official said in a brief statement, speaking on condition of anonymity. Her team declined to provide specifics about that proposal or comment directly on how unrealized gains would be treated.

Kamala Harris in October 2024
U.S. Vice President Kamala Harris

Hannah Beier/Photographer: Hannah Beier/Bloom

Harris’ campaign also declined to say if she supports the specific parameters of the minimum tax on billionaires included in Biden’s annual budget request to Congress, which — despite the name — would apply a 25% minimum levy to income of those with at least $100 million in assets. Her campaign has been mum about whether she would seek to change a provision in the tax code that allows many wealthy individuals to avoid capital gains taxes entirely when they pass assets onto their heirs.

The move to tax unrealized gains was one of the more polarizing features of Biden’s budget proposal — critics saw it as murky to enforce and a disincentive for growth, while advocates cheered it as an innovative way to tax the rich more.

Harris’ silence comes as she’s bolstered her pro-business rhetoric and tacked her policy agenda to the middle to woo Republican and independent voters with polls showing her deadlocked against Republican rival Donald Trump. She described herself as a “pragmatic capitalist” in an interview with Telemundo Tuesday, saying she is part of a new generation of leadership that “actively works with the private sector to build up the new industries of America.”

Days after Harris replaced Biden as the Democratic presidential nominee in late July, her campaign said she supports the revenue measures in the president’s budget request, though she’s since broken with him on the scope of a capital gains tax increase, calling for a top rate hike from 20% to 28%, instead of the 39.6% that Biden has embraced.

Capital gains taxes are generally paid when an asset is sold, which means that people who hold an asset that has appreciated considerably don’t immediately pay taxes on the increase. In some cases, the wealthy simply borrow money against the gains rather than having to sell.
Some of the richest people owe relatively few taxes in comparison to their overall wealth because they hold onto their assets indefinitely, vastly growing their personal fortunes through unrealized gains, but rarely recording any income on paper, which would trigger an IRS bill.

The ambiguity on unrealized gains could be strategic — by avoiding taking a position, Harris is able to give herself room to negotiate in the future on a portion of her tax agenda that is closely scrutinized by Wall Street and Silicon Valley.

Billionaire investor Mark Cuban, a Harris ally, predicted over the weekend that a tax on unrealized gains would not be enacted. “That’s an economy killer. Kamala knows that,” Cuban said at an event Saturday in Arizona, according to NBC. “You haven’t heard her talk about it.”

The debate is, in some ways, theoretical, with polls showing Republicans on track to take control of the Senate even if Harris wins the presidency. A divided government dims her hopes of passing the fresh taxes she’s seeking, and may pressure her to avoid digging in on proposals with slim chances of success.

Harris is grappling with how strongly to break from Biden in the race against Trump, where his campaign has said a tax on unrealized gains would “kill 75,000 jobs, reduce investment incentives, hurt long-term economic growth, and target family farms and family-owned small businesses the most.” Trump, for his part, has campaigned on a long list of politically-targeted tax breaks, which economists have warned would add trillions to the national debt.

The Biden budget, which has proposed including unrealized gains when calculating income for the 25% billionaire minimum tax, has also raised concerns from tax professionals. 

The plan “would be a departure from the way we’re treating capital gains under current law and how we treat it historically,” Garrett Watson, a senior policy analyst at the right-leaning Tax Foundation, said in an interview. “We’re generally more skeptical of this kind of approach.”

Harris has also campaigned on a slew of other tax measures, including higher corporate tax rates, an expanded child tax credit and expanded deductions for startup businesses.

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Accounting

IAASB tweaks standards on working with outside experts

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The International Auditing and Assurance Standards Board is proposing to tailor some of its standards to align with recent additions to the International Ethics Standards Board for Accountants’ International Code of Ethics for Professional Accountants when it comes to using the work of an external expert.

The proposed narrow-scope amendments involve minor changes to several IAASB standards:

  • ISA 620, Using the Work of an Auditor’s Expert;
  • ISRE 2400 (Revised), Engagements to Review Historical Financial Statements;
  • ISAE 3000 (Revised), Assurance Engagements Other than Audits or Reviews of Historical Financial Information;
  • ISRS 4400 (Revised), Agreed-upon Procedures Engagements.

The IAASB is asking for comments via a digital response template that can be found on the IAASB website by July 24, 2025.

In December 2023, the IESBA approved an exposure draft for proposed revisions to the IESBA’s Code of Ethics related to using the work of an external expert. The proposals included three new sections to the Code of Ethics, including provisions for professional accountants in public practice; professional accountants in business and sustainability assurance practitioners. The IESBA approved the provisions on using the work of an external expert at its December 2024 meeting, establishing an ethical framework to guide accountants and sustainability assurance practitioners in evaluating whether an external expert has the necessary competence, capabilities and objectivity to use their work, as well as provisions on applying the Ethics Code’s conceptual framework when using the work of an outside expert.  

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Tariffs will hit low-income Americans harder than richest, report says

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President Donald Trump’s tariffs would effectively cause a tax increase for low-income families that is more than three times higher than what wealthier Americans would pay, according to an analysis from the Institute on Taxation and Economic Policy.

The report from the progressive think tank outlined the outcomes for Americans of all backgrounds if the tariffs currently in effect remain in place next year. Those making $28,600 or less would have to spend 6.2% more of their income due to higher prices, while the richest Americans with income of at least $914,900 are expected to spend 1.7% more. Middle-income families making between $55,100 and $94,100 would pay 5% more of their earnings. 

Trump has imposed the steepest U.S. duties in more than a century, including a 145% tariff on many products from China, a 25% rate on most imports from Canada and Mexico, duties on some sectors such as steel and aluminum and a baseline 10% tariff on the rest of the country’s trading partners. He suspended higher, customized tariffs on most countries for 90 days.

Economists have warned that costs from tariff increases would ultimately be passed on to U.S. consumers. And while prices will rise for everyone, lower-income families are expected to lose a larger portion of their budgets because they tend to spend more of their earnings on goods, including food and other necessities, compared to wealthier individuals.

Food prices could rise by 2.6% in the short run due to tariffs, according to an estimate from the Yale Budget Lab. Among all goods impacted, consumers are expected to face the steepest price hikes for clothing at 64%, the report showed. 

The Yale Budget Lab projected that the tariffs would result in a loss of $4,700 a year on average for American households.

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Accounting

At Schellman, AI reshapes a firm’s staffing needs

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Artificial intelligence is just getting started in the accounting world, but it is already helping firms like technology specialist Schellman do more things with fewer people, allowing the firm to scale back hiring and reduce headcount in certain areas through natural attrition. 

Schellman CEO Avani Desai said there have definitely been some shifts in headcount at the Top 100 Firm, though she stressed it was nothing dramatic, as it mostly reflects natural attrition combined with being more selective with hiring. She said the firm has already made an internal decision to not reduce headcount in force, as that just indicates they didn’t hire properly the first time. 

“It hasn’t been about reducing roles but evolving how we do work, so there wasn’t one specific date where we ‘started’ the reduction. It’s been more case by case. We’ve held back on refilling certain roles when we saw opportunities to streamline, especially with the use of new technologies like AI,” she said. 

One area where the firm has found such opportunities has been in the testing of certain cybersecurity controls, particularly within the SOC framework. The firm examined all the controls it tests on the service side and asked which ones require human judgment or deep expertise. The answer was a lot of them. But for the ones that don’t, AI algorithms have been able to significantly lighten the load. 

“[If] we don’t refill a role, it’s because the need actually has changed, or the process has improved so significantly [that] the workload is lighter or shared across the smarter system. So that’s what’s happening,” said Desai. 

Outside of client services like SOC control testing and reporting, the firm has found efficiencies in administrative functions as well as certain internal operational processes. On the latter point, Desai noted that Schellman’s engineers, including the chief information officer, have been using AI to help develop code, which means they’re not relying as much on outside expertise on the internal service delivery side of things. There are still people in the development process, but their roles are changing: They’re writing less code, and doing more reviewing of code before it gets pushed into production, saving time and creating efficiencies. 

“The best way for me to say this is, to us, this has been intentional. We paused hiring in a few areas where we saw overlaps, where technology was really working,” said Desai.

However, even in an age awash with AI, Schellman acknowledges there are certain jobs that need a human, at least for now. For example, the firm does assessments for the FedRAMP program, which is needed for cloud service providers to contract with certain government agencies. These assessments, even in the most stable of times, can be long and complex engagements, to say nothing of the less predictable nature of the current government. As such, it does not make as much sense to reduce human staff in this area. 

“The way it is right now for us to do FedRAMP engagements, it’s a very manual process. There’s a lot of back and forth between us and a third party, the government, and we don’t see a lot of overall application or technology help… We’re in the federal space and you can imagine, [with] what’s going on right now, there’s a big changing market condition for clients and their pricing pressure,” said Desai. 

As Schellman reduces staff levels in some places, it is increasing them in others. Desai said the firm is actively hiring in certain areas. In particular, it’s adding staff in technical cybersecurity (e.g., penetration testers), the aforementioned FedRAMP engagements, AI assessment (in line with recently becoming an ISO 42001 certification body) and in some client-facing roles like marketing and sales. 

“So, to me, this isn’t about doing more with less … It’s about doing more of the right things with the right people,” said Desai. 

While these moves have resulted in savings, she said that was never really the point, so whatever the firm has saved from staffing efficiencies it has reinvested in its tech stack to build its service line further. When asked for an example, she said the firm would like to focus more on penetration testing by building a SaaS tool for it. While Schellman has a proof of concept developed, she noted it would take a lot of money and time to deploy a full solution — both of which the firm now has more of because of its efficiency moves. 

“What is the ‘why’ behind these decisions? The ‘why’ for us isn’t what I think you traditionally see, which is ‘We need to get profitability high. We need to have less people do more things.’ That’s not what it is like,” said Desai. “I want to be able to focus on quality. And the only way I think I can focus on quality is if my people are not focusing on things that don’t matter … I feel like I’m in a much better place because the smart people that I’ve hired are working on the riskiest and most complicated things.”

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