BIDEN EYEING HIGHER TAX RATE
May 20, 2021 - Douglas Myser
Biden eyeing higher tax rate. President Joe BIden will propose almost doubling the capital gains tax rate for wealthy individuals to 39.6% to help pay for a raft of social spending that addresses long standing inequality, according to people familiar with the proposal. For those earning $1 million or more, the new top rate, coupled with an existing surtax on investment income, means that federal tax rates for wealthy investors could be as high as 43.4%. The new marginal rate of 39.6% would be an increase from the current base rate of 20%, the people said on conditional of anonymity because the plan is not yet public. A 3.8% tax on investment income that funds Obamacare would be kept in place, pushing the tax rate on returns on financial assets higher than rates on some wage and salary income, they said. Socks slid the most in more than a month on the news, with the S&P 500 index down 0.9% at the close. Ten year Treasuries yields fell to 1.54% from an intraday high of 1.59% before Bloomberg's report. Biden eyeing higher tax rate.
The report could reverse a long standing provision of the tax code that taxes capital gains and income tax rates for wealthy individuals, saying it's unfair that many of them pay lower rates than middle class workers. White House Press Secretary Jen Psaki, asked about the capital gains plan at a press briefing and said, " we're still finalizing what the pay fors look like." Biden is expected to release the proposal next week as part of the tax increases to fund social spending in the forthcoming "American Families Plan". Other measures that the administration has discussed in recent weeks include enhancing the estate tax for the wealthy. Biden has warned that those earning over $400,000 can expect to pay more in taxes. The rich may be in need of tax resolution services. The White House has already rolled out plans for corporate tax hikes, which go to fund the $2.25 trillion infrastructure-focused "American Jobs Plan". Republicans have insisted on maintaining the 2017 tax cuts they enacted.