- The new 39.6% rate would apply to individuals earning more than $1 million or more, Bloomberg reported, citing people familiar with the situation.
- The proposed hike of the capital gains tax is just one of several ways Biden could raise taxes on wealthy individuals to pay for his American Families Plan, which will focus on childcare, paid leave and other elements of the “care economy.”
- While the White House has not yet released official details, the Washington Post reported last week that the plan is expected to include $1 trillion in new federal spending and $500 billion in new tax credits.
- The Dow Jones Industrial Average plunged 400 points on the news.
In addition to hiking taxes on capital gains, Biden is a proponent of raising the top income tax rate on ordinary income from 37% to 39.6% and limited tax deductions for the wealthy. During his presidential campaign, he supported returning estate and gift tax rates to levels from 2009 (when the top rate was 45% and the estate tax exemption was $3.5 million per individual, compared to $11.7 milliontoday). Biden has also proposed expanding payroll taxes for people earning above $400,000 per year to help shore up the finances of the Social Security program as well as eliminating the “step-up” in basis—a tax loophole that allows heirs to immediately sell appreciated assets they inherit without incurring any capital gains tax on those assets.
WHAT TO WATCH FOR
The White House is expected to introduce Biden’s American Families Plan—the follow-up to his infrastructure-focused American Jobs Plan—ahead of his address to a joint session of Congress next week. Biden has repeatedly promised that Americans earning less than $400,000 per year will not see any new tax increases under his plan.