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Biden eyes tax rate as high as 43.4% in next economic package

(Bloomberg) – President Joe Biden to propose nearly doubling the capital gains tax rate for high net worth individuals to 39.6% to help pay for a series of social spending that tackles long-standing inequality , according to people close to the proposal. $ 1 million or more, the new top rate, combined with an existing surtax on investment income, means federal tax rates for high net worth investors could reach 43.4%. The new marginal rate of 39.6% would be an increase from the current base rate of 20%, people said on condition of anonymity because the plan is not yet public. , pushing the tax rate on returns on financial assets higher than the rates on certain income and wages, they said. Index 500 down 0.9% at close. Ten-year T-bill yields fell to 1.54% from an intraday high of 1.59% ahead of Bloomberg’s report.The proposal could reverse a long-standing tax code provision that mandates return on investment lower than on the job. Biden campaigned for the equalization of capital gains and income tax rates for wealthy people, saying it was unfair that many of them pay lower rates than working class workers average. , said: “We are still in the process of finalizing what the payments look like.” Biden is expected to release the proposal next week as part of tax increases to fund social spending in America’s upcoming “plan for families.” Other measures the administration has discussed in recent weeks include improving the inheritance tax for the wealthy. Biden warned that those earning more than $ 400,000 can expect to pay more taxes. The White House has already rolled out corporate tax hike plans, which are used to fund the infrastructure-focused $ 2.25 trillion “US Jobs Plan”. Republicans insisted on maintaining the 2017 tax cuts implemented by former President Donald Trump, and argued that the capital gains framework encourages savings and promotes future economic growth. “This will reduce investment and cause unemployment,” Chuck Grassley of Iowa, a senior Republican on the Senate Finance Committee and former chairman of that committee, said of the Biden capital-gains plan. He praised the outcome of the 2017 tax cuts and said, “If it ain’t broke, don’t fix it.” GOP lawmakers called on Thursday to reallocate previously appropriate and unused pandemic relief funds to help pay for their infrastructure counter-offer plan. The group underscored opposition to tax hikes, except for a possible overhaul of levies intended to finance highways in a way that would cover electric vehicles. Earlier: GOP Counters Biden with $ 568 billion in PlanBiden’s infrastructure will detail the plan for American families in a joint address to Congress on April 28. It is expected to include a wave of new spending for children and education, including a temporary extension of an expanded child tax credit that would give parents up to $ 300 a month for young children or $ 250 for children six years of age and over. Biden’s proposal to equalize the tax rates on wage income and capital gains for high earners would drastically reduce the favorable tax treatment of so-called carried interest, i.e. reduction in profits on investments made by private equity and hedge fund managers. End deferred interest benefits for fund managers who earn more than $ 1 million because they would not be able to pay lower capital gains rates on their income. Those earning less than $ 1 million could still claim the tax break, unless Biden repeals the tax provision entirely. The capital gains increase would bring in $ 370 billion over a decade, according to a Center estimate. Urban-Brookings Tax Policy Based on Biden’s Campaign Platform: For $ 1 million in high-tax states, capital gains rates could be above 50%. For New Yorkers, the combined state and federal capital gains rate could reach 52.22%. For Californians, it could be 56.7%. Democrats said current rates of capital gains largely help high earners who derive their income from investments rather than wages, which translates into higher incomes. lower tax rates for the rich than those they employ. are paid when an asset is sold and are applied to the amount of appreciation of the asset between the time it was purchased and the time it is sold. “There should be equal treatment for wages and wealth,” Senate Finance Committee chairman Ron Wyden, an Oregon Democrat who is the chamber’s senior tax writer, told reporters at the meeting. ‘a conference call Thursday. “At the Finance Committee, we will be ready to raise whatever money the Senate Democratic Caucus deems necessary.” (Updates with market close in fourth paragraph, interest in 12th paragraph.) For more articles like this, please visit us at bloomberg Subscribe now to stay ahead with the most popular source of business news More reliable. © 2021 Bloomberg LP

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