The moves to raise revenue would be used to pay for education, labor programs, universal pre-K, and continuation of an expanded child tax credit – all proposals Biden plans to spell out in an address to Congress next week.
The president would push the top income tax rate up to 39.6 per cent – where it was before Trump’s 2017 tax cuts. Capital gains – where Biden has already called for changes to end a major ‘loophole,’ would jack up rates from their current 20 per cent for those earning more than $1 million.
President Joe Biden will call to raise the to income tax rate up to 39.6 per cent
The hike would have those owners have their capital gains taxed at a 39.6 rate as well.
With an existing surtax on investment income, some earners could pay a rate of 43.4 per cent,
Biden is preparing to announce more details of his proposed $4 trillion economic plan, which includes his $2.3 trillion infrastructure proposal.
The Dow Jones Industrial Average dropped 275 points Thursday afternoon on the news
The Dow Jones Industrial Average dropped 275 points Thursday afternoon on the news, or 0.7%.
The broader S&P 500 and tech-heavy Nasdaq erased gains to trade at session lows.
His second wave ‘human infrastructure’ plan would use the revenue for an expanded child tax credit that was included on a temporary basis in the $1.9 trillion coronavirus relief plan. Other proposals would cover universal pre-kindergarten, paid leave, free tuition, and other programs intended to benefit the workforce, the New York Times reported
The 39.6% top income tax rate would return to the 2012 level enacted after President Barack Obama signed the American Taxpayer Protection Act. A Net Investment Income tax of 3.8 per cent was included as a revenue raiser in the Affordable Care Act, putting the top total rate at 43.4 per cent. The tax hit investment income on individuals earning more than $200,000 in investment income.
For those earning more than $1 million in high-tax states like New York and California, their total tax rate could be north of 50 per cent..
Biden’s spending plan is expected to come in at about $1.5 trillion, on top of the $2.3 trillion infrastructure proposal.
Biden campaigned on hiking capital gains, and during the George W. Bush administration voted against lowering it to 15 per cent temporarily.
He told Iowa Pubic Television in 2019: ‘I believe we should, in fact, the capital gains tax should be at what the highest minimum tax should be, we should raise the tax back to 39.6 percent instead of 20 percent.’
The taxes get applied when assets are sold.