Biden’s pitch for how to spend $7T a year involves more money out of your pocket. Specifically, raising capital gains tax rates to 44%, but also 4x increase to the new stock buyback tax (which discourages efficient capital allocation by profitable companies), raising corporate taxes to 28% from 21% (making the US much less competitive globally, one of Trump’s clear wins), and raising Medicare and various other taxes on the Evil Rich.
Congress will be forced into tough negotiations over the future of the tax code, with large portions of former President Donald Trump’s 2017 cuts set to expire at the end of 2025. Many lower- and middle-income households will see a tax increase if lawmakers don’t act, providing motivation for both Democrats and Republicans.
proposal would increase the capital-gains tax rate to equalize the taxation of investment and wage income. That would mean capital gains for those earning at least $1 million would be taxed at a base rate of 39.6%, up from 20%.
BIDEN TAX PLAN CALLS FOR 44.6% LEVY ON INVESTMENTS
The plan also calls for taxing assets when an owner dies, ending a benefit that allowed the unrealized appreciation to go untaxed when transfered to an heir
Trump’s 2017 corporate tax cut would get significantly rolled back, bringing the top rate to 28% from 21%. The proposal also calls for increasing the taxes US companies owe on their foreign earnings to 21%, doubling the 10.5% rate in Trump’s tax law… Biden would also impose a 21% corporate minimum tax on domestic companies, an increase from the current 15%, which means that some businesses are restricted from using all their tax breaks.
Real Estate. The budget proposal would eliminate a tax break known as “like-kind exchanges”
There’s something to dislike for almost everyone, but hey, when you try to spend trillions you don’t have, you have to hit up anyone with any money left to pay for it.
I may be in the minority on this, but eliminating the step-up basis makes a lot of sense to me. I wouldnt tax property at death, but I’d require assets be passed down retaining their original cost basis. For true “family assets” the family could still hold it forever without being taxed. But it’s stupid that run-of-the-mill stock holdings and other random for-profit investments get a stepped up basis when inherited.
Biden is proposing to raise the top personal-income tax rate to 39.6%, from 37%, for those making more than $400,000. That higher rate would reverse a cut signed into law by Trump.
Why would Dems propose this instead of simply allowing the TCJA tax cuts to expire. Politically they could simply blame Trump for it.
About capital gains, I don’t have an issue with eliminating the step-up basis on death. I can also see raising the max rate on CG but aligning them to ordinary income would be a big jump for many small investors. The 0% tax on capital gains for low-income investors would suddenly jump to 15% or 25% tax. I don’t think that fits the tax-the-rich-more only theme of Democrats. Even middle class investors who are currently taxed at 15% on capital gains would likely suddenly pay 25% or 28%. So plenty of opportunity to piss off a lot of their own voters.
Same with Medicare tax. That’d hit people earning wages which is a very large tax base. On top of income tax rates going up from expiration of TCJA, this sounds like a very tough pill to swallow.
No issue personally about carrier interest. I think the people earning these can have them taxed as ordinary income considering their income levels.
In principle, I’m not against some sort of default flat rate to tax people with over $100M wealth but I don’t know how they’d go around assessing it. A lot of that wealth is in unrealized gains so how would that 25% rate work? What if that wealth is in tax-advantaged accounts?
I don’t know about the stock buyback change. Having no tax on it like before Biden’s IRA lead to companies systematically doing this instead of paying dividends that would be taxed. As a form of payment to investors, it doesn’t seem absurd to tax it but increasing 4 times at the same time as raising capital gains tax seems like going too far the other way. If 1% is considered insufficient, I’d probably prefer a smaller incremental hike (at least at first).
Overall the thing that strikes me is the ensemble of tax increases. Individually, some make sense to me but I’d be concerned over the effect of the totality of them. But my main concern is not just the tax increases themselves (after all the current tax revenues are too low to pay for current spending), but the thought that they could be used to justify increasing spending instead of using them to just return to budget neutrality on the current level of spending.
Latest Biden proposals - tax whitey, as an excuse to tax the rich even more. Give away more tax credits to the poor for lots of kids and health insurance.
Treasury estimates that 92 percent of the benefits of the tax expenditure for preferential rates on capital gains and qualified dividends accrue to White families.
Tax capital income for high-income earners at ordinary rates (page 80)
The Administration’s Fiscal Year 2025 Budget proposes to increase the top marginal rate from 37 percent to 39.6 percent above $400,000 (page 78), and it would apply this top marginal rate to the long-term capital gains and qualified dividends of taxpayers with taxable income of more than $1 million. An additional proposal would increase the net investment income tax rate by 1.2 percentage points on income above $400,000 (page 76), bringing the net investment income tax rate to 5 percent for this population. Together, the proposals would increase the top marginal rate on long-term capital gains and qualified dividends to 44.6 percent.
As shown in a Treasury study, preferential tax rates on long-term capital gains disproportionately benefit White taxpayers
Well, to risk stating the obvious, LTCG rates benefit those with long term gains, ie people with lots of money in long term successful investments. The fact they happen to be white more of than not is neither here nor there, except for this race-obsessed administration.
Convenient how they forget to note that those White families comprise 83% of taxpayers. So that 92% is a lot closer to what should be expected, than it is to being inequitable.
For example, white Americans are 83 percent of total taxpayers, and the percentage of zero-tax filers who are white is 79 percent. African Americans are roughly 13 percent of total taxpayers and 17 percent of zero-tax filers. Asian Americans comprise 3.6 percent of total taxpayers and 3.4 percent of zero-tax filers.
That said, the percentage of zero-tax filers within each ethnic or racial group does vary: 34 percent of Asian Americans tax filers will get back every dollar withheld, 35 percent of white American tax filers will owe nothing, and 48 percent of African Americans will file a tax return with no liability.
So 1/2 African Americans pay no tax, while only 1/3 Whites are afforded this benefit. I suspect that’s the reason for that 92% Xerty quoted; you cant benefit from preferential rates when you are already paying 0%.
Data is data. Do you really believe those figures have changed significantly over the past 20 years? If anything, I suspect that inequity has only grown.
I think it’s very possible that population percentages have changed significantly in 20 years. Especially I’d guess the asian and hispanic populations have increased quite a bit over that period.
Considering how close the numbers are, that could have enough of an impact on the picture of whether our society has changed towards more or less inequality in these 20 years.
tax payers
all-taxpayer fraction: white 83%; african 13%; asian 3.6%
0-tax payer fraction: white 79%; african 17%; asian 3.4%
Besides the inequity is due to african americans earning statistically less than whites or asians. Are you advocating fixing this with reparations or more affirmative action so that african american finally earn as much as whites/asians and thus pay taxes at a similar rate?
I’m advocating for consistency - if data establishes inequitable taxation outcomes that must be addressed, it should do so in all instances. (if it isnt clear from my past comments, I think it’s all pretty much a farce.)
In terms of consistency, aren’t the tax rules the same for every taxpayer? I think that’s as far as the consistency goes though.
After that, the system could be seen as inequitable by design of simply being progressive. To me, an equitable system would consider all income types as ordinary income with no deductions, incentives, exemptions, credits, etc, and then all this income would be taxed at a single flat rate. This regressive system however was not deemed acceptable.
Instead, by taxing different income sources at different rates, adding deductions, exemptions, credits, tax-deferrals, etc to promote certain behaviors, it seemed to me that we agreed on a more progressive system that is inherently inequitable. After that, the debate is only on how inequitable we want the tax system to be.
For simplicity, maybe an example would help. What added consistency would you introduce? And would that make it truly equitable or just a different kind of inequitable?
I was just making a specific response to a specific proposal, that centers on race. If it’s so necessary to eliminate a tax rule because White people benefit from it disproportionally, then it’s equally necessary to eliminate tax rules from which African Americans benefit from disproportionally. Whatever deduction/credit/exemption it is that accounts for disproprotionally more African Americans paying 0% tax should also be put on the chopping block.
It’s not the subject of any section in the US tax code. The law is based on income. Whether one gorup of people tends to have more income than another is irrelevant to the tax code itself.
You are still ignoring the point. The referenced article is entirely about changing part of the tax code solely because it disproportionally benefits whites.
As I also said, I agree it is a farce of an argument. But if you’re going to make that argument about one percieved racial inequity in the tax code, you need to allow it to be made about any percieved racial inequity in the tax code. It isnt a one way street.
