US President Joe Biden wants the wealthy to pay much more taxes on the profits they make on their assets. Insiders told Bloomberg News that he wants to double the highest federal capital gains tax rate. This news led to a drop in the New York stock market.
Currently, the federal government levies a 20 percent tax on Americans whose income exceeds $ 1 million on profits they make from selling, for example, stocks, bonds, or real estate. Biden reportedly wants to increase this rate to 39.6 per cent.
Combined with an additional 3.8 percent tax on investment gains introduced in 2013 to fund reform of former President Barack Obama’s health insurance system, the tax rate for many wealthy Americans is 43.4 percent. If the proposals are passed on, the higher rate of capital gains tax could become even higher on income from business.
Need money to package the investment
Earlier this year, Biden announced a more than $ 2 trillion investment package aimed at, among other things, improving infrastructure and greening the US economy. He wants to finance those plans with higher taxes.
Democrats have long criticized the fact that higher rates of capital gains tax are, in short, the money you make with money, than those of salaries or wages. This would benefit the rich. In some cases, wealthy entrepreneurs have to pay less taxes than the employees who hire them. In addition, the rich have become richer in the United States during the Corona crisis and the poorest have become poorer. Amazon founder, Jeff Bezos, for example, is currently worth $ 194.4 billion. Figures show that this number was still $ 115 billion in January 2020 Interested in the trade. Bezos has previously been positive about Biden’s plans to increase the corporate tax from 21 to 28 percent.
Critics point to inflation
However, arguments are being raised mainly from conservative circles about why profits from property should be taxed less than income from work. Lower rates, for example, stimulate investment in promising companies that can grow rapidly. In addition, the capital gains tax does not take into account inflation which can explain a large portion of the gains, say, stocks, critics argue.
It spoiled the news of taxing the fun-loving rich on Wall Street. Major metrics, which started the trading session in a shaky way anyway, reacted to a drop in news. The Dow Jones index closed 0.9 percent lower at 33,815.90 points. The broad S&P 500 index lost 0.9 percent to 4,134.98 points, and the technical Nasdaq stock exchange fell the same percentage to 13,818.41 points.