Biden Eyeing Tax Rate as High as 43.4%

BMF

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This probably should go in the politics forum, but....

Biden Eyeing Tax Rate as High as 43.4% in Next Economic Package

Biden Eyeing Tax Rate as High as 43.4% in Next Economic Package

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 39.6% rate would be an increase from the current base rate of 20%, the people said on the condition 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.

QuickTake: How Capital Gains Are Taxed and What Biden Might Do

Stocks 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 Treasury yields fell to 1.54% from an intraday high of 1.59% before Bloomberg’s report.

The proposal could reverse a long-standing provision of the tax code that taxes returns on investment lower than on labor. Biden campaigned on equalizing the 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 Thursday, 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 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 retaining the 2017 tax cuts implemented by former President Donald Trump, and argued that the current capital-gains framework encourages saving and promotes future economic growth.

“It’s going to cut down on investment and cause unemployment,” Chuck Grassley of Iowa, a top Republican on the Senate Finance Committee and former chair of that panel, said of the Biden capital-gains plan. He lauded the result of the 2017 tax cuts, and said, “If it ain’t broke, don’t fix it.”

GOP lawmakers on Thursday called for repurposing previously appropriated, unused pandemic-relief funds to help pay for their counteroffer infrastructure plan. The group underlined opposition to tax hikes, other than a potential revamp of the levies that go toward highway funding in a way that would cover electric vehicles.

Earlier: GOP Counters Biden With $568 Billion Infrastructure Plan

Biden will detail the American Families Plan in a joint address to Congress on April 28. It is set to include a wave of new spending on children and education, including a temporary extension of an expanded child tax credit that would give parents up to $300 a month for young children or $250 for those six and older.

Biden’s proposal to equalize the tax rates for wage and capital gains income for high earners would greatly curb the favorable tax treatment on so-called carried interest, which is the cut of profits on investments taken by private equity and hedge fund managers.

The plan would effectively end carried interest benefits for fund managers making more than $1 million, because they wouldn’t be able to pay lower capital gains rates on their earnings. Those earning less than $1 million may be able to still claim the tax break, unless Biden repeals the tax provision entirely.

The capital gains increase would raise $370 billion over a decade, according to an estimate from the Urban-Brookings Tax Policy Center based on Biden’s campaign platform.

For $1 million earners in high-tax states, rates on capital gains could be above 50%. For New Yorkers, the combined state and federal capital gains rate could be as high as 52.22%. For Californians, it could be 56.7%.

Democrats have said current capital gains rates largely help top earners who get their income through investments rather than in the form of wages, resulting in lower tax rates for wealthy people than those they employ.

Capital gains taxes are paid when an asset is sold, and are applied to the amount of appreciation on the asset from when it was bought to when it is sold.Congressional Democrats have separately proposed a series of changes to capital-gains taxation, including imposing the levies annually instead of when they are sold.

“There ought to be equal treatment for wages and wealth,” Senate Finance Committee Chairman Ron Wyden, an Oregon Democrat who’s the chamber’s top tax-writer, told reporters in a phone briefing Thursday. “On the Finance Committee we will be ready to raise whatever sums the Senate Democratic caucus thinks are necessary.”
 

Concrete Helmet

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Don't blame me....seems a certain member here told you guys what would happen....the stock market will die very quickly...then the RE market...hate to say I told you so......but....was that a "pop" I just heard?
 

78

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First of all, it’s on incomes north of $1M.

Secondly, 39.6% won’t make it through the Senate. Maybe 28%.

I’m more concerned re potential loss of the step up.
 

no1g8r

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First of all, it’s on incomes north of $1M.

Secondly, 39.6% won’t make it through the Senate. Maybe 28%.

I’m more concerned re potential loss of the step up.

Apparently you don't make $1m+ in income per year, otherwise, you'd be concerned.
 

FireFoley

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Apparently you don't make $1m+ in income per year, otherwise, you'd be concerned.

EXACTLY. @BMF, you know I love you and you are one of the best posters on here, but this is a clear example of can't see the forest thru the trees. If you tax any, you in effect tax all. Just like raising "corporate" taxes would raise taxes on indivuduals in some ways. I understand almost everyone looks at how things might affect them directly, but looking at the Big Picture is the better way to look at it IMO.
 

BMF

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I've never understood how the Executive Branch can set the tax rate. Shouldn't
EXACTLY. @BMF, you know I love you and you are one of the best posters on here, but this is a clear example of can't see the forest thru the trees. If you tax any, you in effect tax all. Just like raising "corporate" taxes would raise taxes on indivuduals in some ways. I understand almost everyone looks at how things might affect them directly, but looking at the Big Picture is the better way to look at it IMO.

Why are you calling me out? He was talking to 78. But I agree - when Biden said, "Nobody making under $400k will pay more..." we all know that was bullsh*t. Just like raising minimum wage to $15 "won't cause inflation".
 

Concrete Helmet

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First of all, it’s on incomes north of $1M.
Some of us have RE portfolios that are worth many times that and may want to start selling them off in the near future....but keep making excuses for this Communist regime.
 

FireFoley

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I've never understood how the Executive Branch can set the tax rate. Shouldn't


Why are you calling me out? He was talking to 78. But I agree - when Biden said, "Nobody making under $400k will pay more..." we all know that was bullsh*t. Just like raising minimum wage to $15 "won't cause inflation".


My sincerest apologies. I thought that was your post @BMF. That was my mistake and I should have noticed it was @78 who posted that. Please take me off your hit list :)
 

78

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Apparently you don't make $1m+ in income per year, otherwise, you'd be concerned.

If I did, I probably wouldn’t fret. That’s a lot of jack.
 

78

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Some of us have RE portfolios that are worth many times that and may want to start selling them off in the near future....but keep making excuses for this Communist regime.

That answer suggests you’re mixing and matching assets with income. Are you hinting that your portfolio generates a multi-million-dollar annual income?
 

FireFoley

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It's gonna take a lot more sucking up than that to get off my sh*t list!

I thought admitting a mistake and taking personal accountability was so rare in today's society that it would be more than enough. I will begin working on a way to get RE prices down 25+% in the Tampa area, just for you!
 

bradgator2

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I thought admitting a mistake and taking personal accountability was so rare in today's society that it would be more than enough. I will begin working on a way to get RE prices down 25+% in the Tampa area, just for you!

I think BMF is looking for reparations
 

Concrete Helmet

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That answer suggests you’re mixing and matching assets with income. Are you hinting that your portfolio generates a multi-million-dollar annual income?
What's the difference if I sell over a million in one year...it's taxed as income for that year.
 

Concrete Helmet

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If I did, I probably wouldn’t fret. That’s a lot of jack.
So if you paid for assets(stocks/RE/whatever) with income that you earned AFTER paying 20% on it in the first place....then paid 43% on it years after paying tax every year(cap or income depending on asset)plus property taxes on RE you'd think that was just groovy....triple taxation in most cases....and in an environment of 8-10% inflation(not the CP LIE)???

This moron just needs to get it over with and come out with the Hammer and Sickle tattooed on his forehead. There's a reason tax receipts were the highest ever in 2018/2019....And I know Dems and liberals can't figure this out but lowering taxes ACTUALLY RAISE tax revenue.
 

78

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What's the difference if I sell over a million in one year...it's taxed as income for that year.

Think about what you just wrote. If you’re dealing in those numbers and not using the tax code to defer gains, you are your own worst enemy, not the IRS. As it is, I don’t think you or your well-to-to-do spouse need much help. Go cry poor elsewhere.
 

78

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So if you paid for assets(stocks/RE/whatever) with income that you earned AFTER paying 20% on it in the first place....then paid 43% on it years after paying tax every year(cap or income depending on asset)plus property taxes on RE you'd think that was just groovy....triple taxation in most cases....and in an environment of 8-10% inflation(not the CP LIE)???

This moron just needs to get it over with and come out with the Hammer and Sickle tattooed on his forehead. There's a reason tax receipts were the highest ever in 2018/2019....And I know Dems and liberals can't figure this out but lowering taxes ACTUALLY RAISE tax revenue.

Dude, capital gains are on top of basis, not imbedded in it. You come across woefully uninformed.
 

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