Biden’s capital gains tax hike: What it means for your taxes



President Joe Biden is proposing to pay for his sweeping $1.8 trillion American Families Plan by raising taxes on wealthy investors. Specifically, the plan calls for higher taxes on capital gains for those earning $1 million or more per year. The top tax rate on long-term capital gains — that is, returns on the sale of stocks or other investments — would increase to 39.6% from 20%.

In addition to helping pay for Biden’s ambitious plan to ramp up spending on education and child care, the White House sees the tax hike as a way to end what it deems one of the most unfair dynamics of the current tax system, “that the tax rate the wealthy pay on capital gains and dividends is less than the tax rate that many middle class families pay on their wages.”

Under the proposal, the top 0.3% of US households would pay the same rate on all income, which would contribute to “equalizing the rate paid on investment returns and wages,” according to a White House fact sheet (PDF).

Below, we outline the implications for taxpayers — and how they differ for rich, middle-class and low-income Americans — and where the plan stands politically.

Exactly what is Biden proposing?

Biden last week unveiled the American Families Plan during his first address to Congress. The proposed $1.8 trillion investment includes universal prekindergarten, free community college, a plan to make child care more affordable and a federal program for family and medical leave.

It follows the announcement in late March of a separate $2.25 trillion infrastructure package, called the American Jobs Plan. That stimulus plan covers everything from road projects to deploying broadband in rural America and would be financed through corporate tax hikes…Read more>>

Source:-cnet 

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