Biden proposed hiking tax on richBiden proposed hiking tax on rich
US President Joe Biden will propose to Congress to raise taxes on the income of the richest Americans to fund a plan to support American families. The tax hike will allow for about $ 1 trillion to be allocated for childcare, universal schooling and paid leave for workers, reports Reuters citing people familiar with the plan.
According to the agency's interlocutors, Biden's new plan is part of an overall radical overhaul the US tax system, designed to increase tax collections from rich Americans and large companies and corporations. He suggests that the maximum marginal income tax rate will rise to 39.6% from 37%, and the tax on investment capital gains will almost double. The latter tax will rise to 39.6% for people earning more than $ 1 million. Thus, the total capital gains tax rate, which includes 3.8% of the net investment tax for individuals with income of $ 200,000 or more ($ 250,000 declared jointly) will be 43.4% for the richest Americans.
Net Investment Tax levies fund the care of the elderly under a law known as Obamacare. Now those who earn more than $ 200,000 a year pay investment tax at a general rate of about 23.8%. The proposed capital gains tax rate could be the highest since its introduction in 1913. Capital gains tax is paid by about 1% of Americans. The interlocutors of the agency noted that the details of the plan will be made public before Biden's appeal to Congress. White House spokeswoman Jen Psaki declined to comment on details of the proposed tax hike, but said the president will reveal his plan to support American families during his congressional speech next Wednesday. She added that the presidential administration has not yet finalized plans to fund new programs, but is ready to raise taxes for the rich and corporations because they "can afford it."
According to Psaki, Biden and White House economists do not expect such tax hikes to have a negative impact on US investment. Biden's new plan is estimated to cost around $ 1 trillion. Earlier, Biden proposed a $ 2.3 trillion plan to support infrastructure and create jobs. The project faced stiff Republican opposition in Congress. They typically support funding for infrastructure projects, but oppose Biden's inclusion of expanded expanded care for the elderly and increased taxes for corporations. Plans to raise taxes on the rich, the agency said, could increase resistance to Biden's infrastructure proposals.
The stock market reacted to news of a possible tax hike for the rich on Thursday slumped in indices. Thus, the S&P 500 index fell 1% at the beginning of the day, which was the sharpest drop in more than a month. "If he had a chance to pass, we would have dropped 2,000 points," Thomas Hayes, chairman of hedge fund Great Hill Capital, commented on the reaction to Biden's offer of stock market indices. By the close of trading, the Dow Jones Industrial Average dropped 0.94% to 33,815.9, the S&P 500 shed 0.92% to 4,134.98, and the Nasdaq Composite fell 0.94% to 13,818.41.