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Biden is set this week to propose nearly doubling taxes on
capital gains to 39.6% for people earning more than $1 million,
Reuters has reported, in what would be the highest tax rate on
investment gains since the 1920s.
The soon-to-be-announced tax hike will treat those investment
gains as wages for top earners and applies only to about 500,000
households, according to Brian Deese, who runs Biden's
policy-writing National Economic Council.
"We need to do something about equalizing the taxation of work
and wealth in this country," Deese told reporters. "And that's
why the reforms that the president will lay out are focused on
this top sliver of people."
He said there is no evidence of a significant impact of those
capital gains tax rates on long-term investment.
Still, wealth advisers have already started counseling clients
on strategies to avoid being clobbered by the new levies, which
would need to be approved by a closely divided Congress.
That political process and widespread business group opposition
is widely expected to mean a lower tax rate than the White House
initially proposes will ultimately be adopted.
Currently, people earning more than $200,000 pay a capital gains
rate of about 23.8%, including the 3.8% net investment tax which
helps fund the Affordable Care Act, known as Obamacare.
Under the new plan, wealthy Americans could face an overall
federal capital gains tax rate of 43.4% including the Obamacare
tax. For some Americans living in New York and California, their
total capital gains tax rate could exceed 50% when state taxes
are included, according to the Tax Foundation.
(Reporting by Andrea Shalal and Trevor Hunnicutt;Editing by
Chris Reese and Andrea Ricci)
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