Biden move is part of an overhaul of the US tax system
President Joe Biden will put forward a plan to raise taxes on America’s wealthiest people, including the largest-ever rise on taxes on investment gains.
The proposal is aimed at funding $1trn in childcare, universal pre-kindergarten education and paid leave for workers, Reuters reported.
The move is a part of a wider overhaul on the US tax system, aimed at getting more tax revenues out of the country’s wealthiest people and largest companies.
Reporters reported that the proposal is calling for the top marginal income tax rate to be increased to 39.6% from 37%. In addition, the plan would double taxes on capital gains to 39.6% for those earning in excess of $1m.
It would be the highest rate of tax on investment gains since the 1920s. Since the aftermath of World War Two, the rate has not gone above 33.8%.
Stocks on Wall Street retreated on Thursday as reports emerged that Biden would propose hiking taxes on the wealthy, including capital gains taxes.
Such a policy will need to pass through Congress, where Biden’s Democrats have narrow majorities, and could struggle to get support from the Republicans.
“If it had a chance of passing, we’d be down 2,000 points,” said Thomas Hayes, chairman and managing member at hedge fund Great Hill Capital LLC, referring to stock market indexes.
Further information is expected to be announced next week ahead of Biden addressing Congress on Wednesday.
White House press secretary Jen Psaki said the president would discuss his “American Families Plan” during his speech to Congress but declined to comment on any details.
“His view is that that should be on the backs … of the wealthiest Americans who can afford it and corporations and businesses who can afford it,” Psaki said.
