Biden to Propose Capital Gains Tax Hike

On Thursday, Bloomberg News and The New York Times reported that the president will include a proposal to increase the capital gains tax for people earning $1 million or more in his American Families Plan, which is expected to be released in the coming days.

Under current law, gains from the sale of stocks, mutual funds, and other capital assets that are held for at least one year are taxed at either a 0%, 15%, or 20% rate. The highest rate (20%) is saved for wealthier taxpayers – i.e., single filers with taxable income over $445,850, head-of-household filers with taxable income over $473,750, and married couples filing a joint return with taxable income over $501,600.

Although details haven't been released yet, the president has previously stated that he wants anyone making more than $1 million per year to pay a 39.6% tax on long-term capital gains.

Essentially, the idea is for millionaires to pay the same tax on long-term capital gains that they would pay on ordinary income, such as wages. Right now, the top tax rate on ordinary income is 37%, but Biden has also said on numerous occasions that he wants to boost that rate to 39.6%, which is the same top rate that applied before former President Trump's 2017 tax reform act.

There's a lot of conjecture in here at this point since the details of the proposal haven't been released, but assuming this proves accurate do you agree with the capital gains tax increase on these high earners to what it would be if it were taxed as wage income?

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Capital gains tax also affect 401K's.

@JimB: In what way do you mean?

Another question:

does this plan affect 401k's? Or the existing plan?

Because the existing one does not last time I checked. There is no capital gains tax on 401k's, they are taxed based on your current income bracket.

Capital gains tax applies to non-qualified funds. 401k's are qualified tax plans, thus capital gains taxes don't apply.

@mrbojangles25: That's why I asked what he meant. They definitely don't affect them directly, either in standard or Roth mode.

In either case I can't see Biden go after retirement stuff, aka Stuff Old People Care About.

You don't mess with seniors, that is any politician's bread and butter.

@mrbojangles25: that tax rate already applies to them

@JimB: No it doesn’t. 401k is taxed based on your income level, Roth aren’t at all. Please stop misleading people.

Its going to stagnate the stock market if not tank it

Such drama.

@mattbbpl: I love the idea. He should go one step further and eliminate the death benefit step up of cost basis as well (for accounts over 1 million I suppose).

@HoolaHoopMan: Step up basis would really be the bigger deal. I'm not sure that's in the cards yet.

The changes being mentioned don't apply to your everyday 'retirement plans'. All of those are taxed as income not capital gains. This is targeting the ultra wealthy.

its true tho, tutes will cash out and leave retail investors with the bag. They arent idiots, they will avoid the tax hike at all costs.

What grand things is the government promising us with by implementing these tax hikes anyway?

If you're so sure then give us a better prediction. Provide a definition of 'tanking' and a date by which the economy will hit that mark.

@sargentd: If it does, then buy the dip. A drop due to an upcoming tax change is the easiest buy opportunity in the game.

Someone else will buy. But I doubt they do that since they're getting very rich.

@LJS9502_basic: It's pretty likely there will be a pre-change dip, but so what?

Yeah, I'm just hoping they do put it in. Plus repealing the doubling of the inheritance tax under Trump's tax plan. They could be substantial avenues of revenue and only impact people making millions, if not tens of millions. .

TBH I don't mind people becoming well-off or even wealthy, but if you're obscenely wealthy, you're probably taking advantage of some system or some people or both, and need to pay your dues.

As long as this doesn't have a harsh impact on anyone but the obscenely wealthy (aka billionaires) I am fine with this.

Fear mongering.

@mrbojangles25: ¿ɓuıɹǝɓuoɯ ɹɐǝɟ sı oɥM

Talking about how this will screw over most people while the rich will just adapt.

I've got news for everyone: we've been through worse financial crashes before. Dot Com bubble, housing bubble, great recession, COVID, etc..

Maybe just once we can crash the economy for good lol. Not "for good" as in permanently, but like for a good cause.

@mrbojangles25: why?

@mrbojangles25: This gets brought up every time we consider raising it, and it's just a short term blip. We did something similar about a decade ago, and some indeed sold some assets. George Lucas famously sold his IPs as part of that. And you know what happened? Someone sold and someone bought! It's ok to cash out for a higher return if you think you'll cash out soon anyway. Someone will buy because they'll be looking for the future returns, and the world will march on.

If you think that the wealthy as a class will just sit on cash, well, their total return at a 39 percent tax rate is still.greater than a 0 percent return at a 0 percent tax rate. They won't just let inflation eat away at their principle like that.

Oh, just for fun, I guess.

no, it's not

Biden needs to keep his mouth shut about this crap. I had a huge drop in my investments after he opened his stupid mouth. There is no way in hell he will raise it to 39.6%, NO WAY IN HELL. He will be lucky to get a 8% increase if that. The thing is with our current tax code rich people will NEVER pay taxes. The only way to fix the tax code is to get rid of it all and move to a simpler system that doesn't allow all of these deductions. A flat tax or a national sales tax is the way to go.

You honestly think people making a million plus in the market will ever pull their money out if they raised it to almost 40%. ROFL No they will sell some off before the raise occurs, and then sit on their investments until someone with a level head comes back and lowers it again.

It is hilarious the Democrats really think this is going to help matters. Just hilarious!

@Xabiss: What percent did your investments drop and when? I'm not seeing anything significant in the Dow.

What about global tax rate?

My portfolio is mainly crypto. I had around 20-25% drop across all my accounts. Yes, it has been crawling back up since he said, what he said. ETH was on a tear the day he said it, going to an all time high. As soon as he opened his mouth it tanked hard that day. When Biden says this crap it only helps the institutional buyer, buy at a discount.

Whales purposely use this as an excuse to make huge dumps. Which trikes fear into consumer buying giving them paper hands. They sell off fearing the worse and then the institutional buyers jump back in buying up what the consumers dropped. I really feel sorry for the consumers that got suckered into that last drop. I feel sorry for the people that get suckered into this FUD when it only helps the institutions.

One of Bidens largest campaign contributor is a huge whale in the crypto space, maybe he did it on purpose. :P Take my tinfoil cap off now. HAHA!

https://www.coindesk.com/cryptocurrency-ceo-donated-second-largest-amount-to-joe-bidens-campaign

I am not big on anything global like that. Countries have a place and I never want to see one large government running everything. If I understand you correctly.

@Xabiss: Oh, crypto? Man, crypto assets have been wildly volatile for awhile. Btc was up 8 percent just this morning, lol. I'm not sure where it is now.

My assets are doing just fine. Crypto is volatile and any news, whether it is talks of mainstream acceptance, future oversight, or bans on purchasing, sends it swinging in either direction. It's the perfect asset to inflate or deflate on pure speculation.

Yes, that is true. What I don't like is that institutional buyers use any excuse to squeeze out the little guys that don't understand this. Crypto is in a place where people can make a lot of money, but you have to be smart about it and know when the bull market is over and take your profits. I just feel sorry for people who sold their positions and took loses because of whale manipulation.

Yes, I feel bad for the people who get owned by the whales taking advantage of these situations. Our president should be very mindful of this is all I am saying. There is no way in hell I believe he will get his doubling of the capital gain tax after a million.

I'm confused about what he should be mindful of. Proposing policy changes?

The idea as proposed I think is that if a US company uses another country to pay less taxes because of a lower tax rate there, it will have to pay the difference between the rate there (if less than minimum, 20 or 21% suggested) to US.

Correct. Both Biden and Yellen have proposed this. It's bit harder of a battle though, as it requires other countries to get on board with it.

Most of EU is for this I believe. Well except Ireland I guess.

soooo, just a regular tuesday then..

That's why you diversify, especially with something as volatile as crypto. The risk is inherently higher. Normal securities, derivatives, or futures, are all tied to other data points so they are less prone to manipulation or speculative news.

Biden is simply doing his job, and the recent drop is more or less a consequence of crypto currencies' innate characteristics, not largely due to what Biden said. Ask yourself, is it smart to throw all your money into an asset that can lose as much value as crypto does, simply due to speculative policies change discussions?

@HoolaHoopMan: Is being a hundred cryptos not diversified? :-P

Do not preach to me about investing. The drop was caused by what he said. You can look at the charts and see right when he announced it and the drop. I watch the charts like a hawk and when I saw the news I knew that whales would take advantage of the situation and they did just that.

I am not saying it is right or wrong, but he shouldn't announce something he will not never get approved. No way in hell is he doubling capital gains tax, that is political suicide. Sorry I like crypto and the risk of it. I have made tons of money from it, but I feel sorry for the people that get shaken out of the market because they don't understand the volatility of it. The whales owned a lot of people on that day and that makes me sad for them.

The volatility of crypto is controlled a lot by the whales.

Then you aren't seeing any underlying problem with crypto currency as it currently stands. The overall stock market, mutual funds, ETFs, etc., all took the news with little impact last Thursday/Friday. The fact that you're acknowledging whales as driving force is the more troublesome aspect.

It works both ways. Someone says something positive about crypto prospects and they can drive the price up. The problem isn't Biden, it's the crypto market being skittish and inherently volatile. You don't get to enjoy the upside potential without the downside loss risk.

@HoolaHoopMan: Who knew that an asset class featuring an asset based on a meme and started as a joke as one of it's star movers could be volatile?

Absolutely this. I find it crazy that the US allows untaxed intergenerational wealth transfer through this estate mechanism. The super rich abuse the hell outta this in the US to perpetuate the cycle of wealth privilege.

I always found how envious and jealous the left is of people with more money of them to be rather entertaining. Because they'll never have money to pass onto their children, they want to punish anyone who does, not because they think they'll get a piece of that money, but because they just don't want anyone else to have something they dont. Jealous, envy, and greed, all the traits they project onto others are all very strong within themselves.

They expect equal outcomes in life, despite their own shortcomings.

If you're going to boil arguments down to unfounded assumptions then a simplistic approach works for you I guess. But your opinion is wrong.

No sh*t. At least normal securities and derivatives partially derive their underlying value from intrinsic data points such as earnings, revenue, and operational profit. There's obviously speculation involved, but it's NOT ALL speculation.

Crypto is more akin to art valuations. What is it worth? I guess as much as someone is willing to pay. Great for laundering money though.