US President Joe Biden wants the wealthy to pay more taxes for the profits they make from their fortunes. Insiders told Bloomberg News that he wants to double the highest federal capital gains tax rate.
Currently, the federal government levies a 20 percent tax on Americans whose income exceeds $ 1 million on profits they make from selling, for example, stocks, bonds, or real estate. Biden reportedly wants to increase this rate to 39.6 per cent.
Combined with an additional 3.8 percent tax on investment gains introduced in 2013 to fund Barack Obama’s health insurance reform, the tax rate for many wealthy Americans is 43.4 percent. If the proposals are passed, the higher rate of capital gains tax could become even higher on business income.
Earlier this year, Biden announced a more than $ 2 trillion investment package aimed at, among other things, improving infrastructure and greening the US economy. He wants to finance those plans with higher taxes.
Democrats have long criticized the fact that higher rates of capital gains tax are, in short, the money you make with money, less than those of salaries or wages. This would benefit the rich. In some cases, wealthy entrepreneurs have to pay less taxes than the employees who hire them.
But arguments are being raised mainly from conservative quarters about why profits from property should be taxed less than income from work. Lower rates, for example, stimulate investment in promising companies that can grow rapidly. Additionally, the capital gains tax does not take into account inflation which could explain a large portion of the gains on shares, for example, as critics argue.
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