Biden proposes the largest capital gains tax in a century

President Joe Biden’s budget proposal for next year includes the largest capital gains tax in the past century. The proposal, released last month, notes that the administration wants to increase the top marginal rate on dividends on long-term capital gains to 44.6 percent, raising the tax rate in states such as California, New Jersey, New York and California above the 50 percent would come true. others.

Critics note that the idea will “discourage investment” and could greatly harm American industries such as technology, while further shrinking the middle class. The last time capital gains taxes even came close to this high was in the late 1970s under Democratic President Jimmy Carter, when the rate stood at 40 percent, an all-time high at the time. Otherwise, rates have remained below 30 percent, falling to 13 percent until the 1920s.

Capital gains are profits made from the sale of assets such as stocks, businesses, homes and other investments. The sale of these assets can generally give rise to a taxable event. The idea of ​​capital gains and taxes on them emerged in the 1920s, and Biden’s proposal is the highest federal rate since its inception.

Although 44.6 percent is the proposed federal rate, the capital gains tax, combined with state rates, would be much higher than places like California (59 percent), New Jersey (55.3 percent), Oregon (54.5 percent ), Minnesota (54.4 percent). ) and New York (53.4 percent), according to Kitco News.

A footnote from the General Explanations of the Administration’s Revenue Proposals Fiscal Year 2025 notes: “A separate proposal would first increase the top ordinary rate to 39.6 percent… A supplemental proposal would increase the net investment income tax rate by 1.2 percentage points above $400,000.”

“Together, the proposals would increase the top marginal rate on long-term capital gains and qualified dividends to 44.6 percent.” To achieve the 44.6 percent figure, two separate proposals would need to be adopted in the final 2025 budget.

John Kartch, an analyst at Americans for Tax Reform, told Kitco: “The proposed Biden top capital gains tax rate is more than twice that of China… and puts the United States in uncharted territory.”

“Biden’s proposed capital gains tax increase will also affect many families if their parents die,” Kartch added. “Biden has proposed adding a second death tax (separate from and in addition to the existing death tax) by removing the increased basis when parents die. This would result in a mandatory capital gains tax on death – a forced realization.”

Specifically, the proposal also eliminates a special tax subsidy for cryptocurrency and other transactions. If the budget is approved, it could mean that crypto and higher-earning equity investors could see their returns significantly reduced in the coming years.

Capital gains taxes will be added to the federal income tax, currently 22 percent. Biden’s 2025 budget proposal also aims to increase the corporate tax rate to 28 percent.

Want more stories like this from the Daily Mail? Visit our profile page and click the follow button above for more news you need.