No one likes paying taxes-- especially not rich people-- which is why America's infrastructure in crumbling and why America is no longer considered a beacon of mankind's future. The wealthy have accrued not just too much wealth but, as a corollary of that, too much political power. Unless that can be broken-- usually not possible without a revolution-- it spells long term decline.
Wednesday, the Washington state House passed (52-46) a capital gains tax bill that imposes a 7% tax on capital gains in excess of $250,000 that has already passed the state Senate. I might add in passing that there are 57 Democrats and 41 Republicans in the House so... you do the math. 3 reactionary Senate Democrats also voted against it-- Steve Hobbs (Everett) Annette Cleveland (Vancouver) and Mark Mullet (Issaquah). Washington has a reputation of having one of the most regressive tax systems in the country; this is meant to change that.
Before we start looking at Biden's capital gains proposal, for comparison's sake these are the capital gains rates for Western European countries that have capital gains taxes on sales of long-term stock sales.
Denmark- 42%
Finland- 34%
France- 34%
Ireland- 33%
Norway- 31.68%
Netherland- 31%
Sweden- 30%
Portugal- 28%
Austria- 27.50%
Germany- 26.38%
Italy- 26%
Spain- 26%
Iceland- 22%
U.K.- 20%
The U.S. has a 20% capital gains tax as well and yesterday Biden proposed raising it to 39.6% for individuals earning more than $1 million. I would be willing to give odds that this will not pass, so don't get your hopes up (or down).
Yesterday, Forbes reported that Biden is also "a proponent of raising the top income tax rate on ordinary income from 37% to 39.6% and limited tax deductions for the wealthy. During his presidential campaign, he supported returning estate and gift tax rates to levels from 2009 (when the top rate was 45% and the estate tax exemption was $3.5 million per individual, compared to $11.7 million today). Biden has also proposed expanding payroll taxes for people earning above $400,000 per year to help shore up the finances of the Social Security program as well as eliminating the “step-up” in basis-- a tax loophole that allows heirs to immediately sell appreciated assets they inherit without incurring any capital gains tax on those assets."
CNBC reported that were Biden's capital gains tax on assets held more than a year to pass, the wealthiest Americans would pay 43.4%, because of the existing 3.8% Medicare surtax on net investment income.
Under current law, long-term capital gains are taxed favorably with respect to wages. The wealthy pay a top 37% rate on wage income, for example.
The White House plan would instead tax capital gains as ordinary income, at a top proposed rate of 39.6%. It would apply to those with more than $1 million in annual income, according to Bloomberg.
(Short-term capital gains, or those held a year or less, are already taxed as ordinary income under current law.)
The Biden plan would also keep the Medicare surtax in place-- creating a top long-term capital-gains rate of 43.4%, according to Bloomberg.
The top long-term capital-gains rate applies to single taxpayers with more than $445,850 of income this year. (It kicks in above $501,600 for married couples filing a joint tax return.)
The Medicare surtax applies to single filers with over $200,000 of income or married couples with $250,000. (These amounts aren’t indexed for inflation.)
I would say that the chance of this passing is zero, since no Republicans will back it and Biden would need every Senate Democrat to go along and I can think of over half a dozen off the top of my head who won't: Joe Manchin (WV), Kyrsten Sinema (AZ), Mark Warner (VA), Tom Carper (DE), Angus King )I-ME), Jon Tester (MT), Maggie Hassan (NH) and Jeanne Shaheen (NH) with another handful whose support would be very questionable. It's much more likely that the white House floated this number so that people will be happy and much-relieved to see the rate negotiated down to 28-30%.
If anyone asked me, I would suggest taking any sell-off in the stock market over this as an excellent buying opportunity-- especially if the sell-off extends into next week.