Biden to propose raising taxes on wealthy and capital gains to fund child care


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WASHINGTON – President Joe Biden will roll out a plan to raise taxes for wealthier Americans and their investments to fund roughly $ 1 trillion in child care, universal preschool education and paid time off for workers, said sources close to the proposal.

The plan, which is part of the White House push for a major overhaul of the U.S. tax system to make the rich and big business pay more, calls for raising the top marginal tax rate to 39.6 % versus 37% and almost double capital gains taxes. at 39.6% for people earning more than $ 1 million, sources said this week.

This would be the highest tax rate on capital gains taxes, which are paid primarily by the richest 1% of Americans, since the tax was introduced in 1913.

News of the proposal sparked sharp declines on Wall Street, as the benchmark S&P 500 fell 1% in the early afternoon, its biggest drop in more than a month.

Such a hike would have to come through Congress, where Biden’s Democratic Party holds narrow majorities and is unlikely to win the support of Republicans.

“If he had a chance to pass, we would be down 2,000 points,” said Thomas Hayes, chairman and managing director of the Great Hill Capital LLC hedge fund, referring to stock indexes.

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Sources said details would be released next week ahead of Biden’s speech to Congress. Tax details related to the plan, in preparation for months, were first reported by The New York Times on Thursday morning.

White House press secretary Jen Psaki said the president would discuss his “plan for American families” during his speech to Congress next Wednesday, but declined to comment on details.

She said the administration had yet to finalize the financing plans, but stressed Biden’s determination to make the rich and corporations pay for new programs.

“His opinion is that it should be on the back – it can be on the backs of the wealthiest Americans who can afford it and the businesses and businesses that can afford it,” Psaki said.

She said Biden and his economics team did not believe the measures would negatively impact investment in the United States.

Yields on Treasuries, which move in the opposite direction to their price, fell to the day’s low.

CAPITAL GAINS

Biden’s new plan, which will likely cost around $ 1 trillion, comes after a $ 2.3 trillion jobs and infrastructure proposal that has already met stiff opposition from Republicans. They typically support funding for infrastructure projects but oppose Biden’s inclusion of priorities such as expanding care for the elderly and asking US companies to foot the bill.

Tax hikes on the rich could strengthen Republicans’ resistance against Biden’s latest “human” infrastructure plan, forcing Democrats to consider pushing him – or at least some of the measures – through Congress using a party line budget vote known as reconciliation.

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Senator Joe Manchin, a moderate Democrat from West Virginia who wields disproportionate power due to the party’s slim majority, recently said he was hesitant to expand the use of reconciliation.

Wealthy Americans could face an overall capital gains tax rate of 43.4%, including the 3.8% net investment tax on those with income of $ 200,000 or more ($ 250,000 joint deposit). The latter helps fund the Affordable Care Act, popularly known as Obamacare.

Currently, those earning more than $ 200,000 pay an overall rate of around 23.8%, including the Obamacare net investment tax instituted under this law.

(Reporting by Jarrett Renshaw, Trevor Hunnicutt; Additional reporting by Andrea Shalal, David Lawder, Dan Burns and Herbert Lash; Editing by Cynthia Osterman and Peter Cooney)

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