BY CONNOR STEENS
A recent report expects President Joe Biden to raise taxes on the wealthiest of Americans, including the largest ever increase in taxation on investment gains. The proposal aims to fund approximately $USD1 trillion in childcare, tuition-free education, a monthly child allowance and paid medical and family leave for Americans.
Focusing on a need to modernize U.S. infrastructure and invest in the next generation, press secretary Jen Psaki stated that “his [Biden’s] view is that that should be on the backs of the wealthiest Americans who can afford it and corporations and businesses who can afford it”, Biden also made guarantees that taxes will not be raised on households earning less than $USD400,000 .
The plan looks to nearly double the tax rate on capital gains for investors earning more than $USD1 million per year and is said to be designed to reward work not wealth and “reform the tax code so that the wealthy have to play by the same rules as everyone else.”
Comparing current rates, if an individual sells a long-held capital asset, they will pay 20% tax on the profit. If the asset is a stock the profit is taxed at 23.8%. Assuming Joe Biden’s proposal is enacted, high earners across the U.S. can expect to pay a 39.6% rate on capital gains, as well as a 43.4% rate on profit taken from financial assets.
These rates have not exceeded 33.8% in the post-WWII era.
The proposed rates would also place the U.S. on the top of the global charts with regards to capital gains tax, and for residents of some U.S. states capital gains rates could be raised to more than 50%: 58.2% in New York City, 56.7% in California and 57.3% in Portland, Oregon.
This dramatic tax proposal comes after a $USD2.3 trillion jobs and infrastructure proposal that is already facing strong opposition from Republican lawmakers. Many agree that tax hikes on the wealthy are likely to bring further resistance against Biden’s future plans.
Other tax propositions that have arisen from Biden’s administration include capping deductions for wealthy taxpayers and increasing the estate tax – further explained here.
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