Biden to float historic tax increase on investment gains for the rich

President Joe Biden will roll out a plan to raise taxes on the wealthiest Americans, including the largest-ever increase in levies on investment gains, to fund about $1 trillion in childcare, universal pre-kindergarten education and paid leave for workers, sources familiar with the proposal said.

The plan is part of the White House’s push for a sweeping overhaul of the U.S. tax system to make rich people and big companies pay more and help foot the bill for Biden’s ambitious economic agenda. The proposal calls for increasing the top marginal income tax rate to 39.6% from 37%, the sources said this week. It would also nearly double taxes on capital gains to 39.6% for people earning more than $1 million.

That would be the highest tax rate on investment gains, which are mostly paid by the wealthiest Americans, since the 1920s. The rate has not exceeded 33.8% in the post-World War Two era.

News of the proposal – which was a staple of Biden’s presidential campaign platform – triggered sharp declines on Wall Street, with the benchmark S&P 500 index (.SPX) down 1% in early afternoon, its steepest drop in more than a month.

Any such hike would need to go through Congress, where Biden’s Democratic Party holds narrow majorities and is unlikely to win support from Republicans. It is also unclear if it would have the unanimous backing of congressional Democrats, which would be essential in the Senate where each party holds 50 seats.

Biden has promised not to raise taxes on households earning less than $400,000.

Biden to float historic tax increase on investment gains for the rich, Reuters, Apr 23