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Biden’s Proposed Top Tax Rate on Capital Gains, Dividends, Would Make U.S. Highest in ‘Developed World’

Biden’s tax proposal would raise the top federal rate on long-term capital gains and qualified dividends from 20% to 39.6%

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Joe Biden

Biden’s tax proposal would raise the top federal rate on long-term capital gains and qualified dividends from 20% to 39.6% for taxpayers with annual income over $1 million, reports CNBC. The Biden administration is targeting the richest Americans because they are often able to manipulate the tax system in their favor, said a White House official.

The proposed top federal tax rate of 39.6% on long-term capital gains and qualified dividends would make the U.S. the highest in the developed world. With average state taxes and a 3.8% federal surtax, the wealthiest people would pay almost 49% total, according to CNBC. Only Ireland has a higher top rate with 51% on dividends. But when it comes to capital gains, the U.S. would claim the highest top rate.

Some of the wealthiest individuals often receive income from capital income like interest, dividends and capital gains. A recent ProPublica report found Warren Buffett, Jeff Bezos, Michael Bloomberg and Elon Musk all pay little to no taxes compared with their wealth.

According to the Tax Foundation, “the top rate high-earning Americans pay on dividends and the sale of appreciated assets would jump to nearly 49%, when combining all federal and state taxes.”

CNBC notes the caveat to this analysis is that Biden’s suggested top U.S. rate would “apply to relatively few taxpayers each year” therefore “it’s difficult to compare tax burdens across countries due to extreme variation in certain details” when “other developed countries impose their top tax rate on a broader pool of people.”

Biden’s proposal “is part of a broader plan to raise taxes for households making more than $400,000 a year, to help fund domestic initiatives that largely benefit the low and middle class” states CNBC.

Senior policy analyst Garrett Watson at the Tax Foundation says the U.S. capital gains tax regime is progressive compared to other countries. However, U.S. states vary greatly in how they tax capital gains and dividends. CNBC reports:

For example, residents of Alaska, Florida, Nevada, South Dakota, Tennessee, Texas, Washington state and Wyoming wouldn’t owe additional state tax on capital gains, according to the Tax Foundation.

Their top rate under Biden’s proposal would be 43.4% (which includes the 39.6% federal rate and the 3.8% net investment income tax). By comparison, California, New York, and New Jersey would have combined rates of more than 54% for the wealthiest residents.

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5 Comments

5 Comments

  1. Blue Boomerang

    June 22, 2021 at 9:27 am

    Translation: Biden is really going after the well paid, work-a-day, white ‘professional class’. Households making over $400K/year? C’mon man. That’s chicken shit. That’s not Jeff Bezos or Zuckerberg or Musk or Bloomberg or Gates or Buffett, et al who are ‘centi-billionaires’ and pay nothing in income tax but ‘have the Democrat party in their pocket’! Biden is a mere ‘tax and spend’ liberal Democrat (are there any other kind?) looking out for his ‘identity politics’ voting base of coloreds and queers. He’s out to ‘get’ conservative, Christian, ‘white guys’ who are MAGA supporters, work for a living, pay their taxes and don’t complain until they are cornered by race baiting, white hating, race hustling black anarchists.

  2. Susan Ball Winterscheidt

    June 22, 2021 at 10:51 am

    He and his buddies are off their rockers. Do they not realize how we retired folks will be doubly affected. We rely on our capital gains and dividends for the few extras in our lives. Just WHAT is problem–of course, realizing how mentally incompetent Biden is, what can be done. PRAY we vote RED come mid-term.

  3. Carolyn Jones

    June 22, 2021 at 12:32 pm

    Who in hell (and that’s where he’s going)does Biden think he is??? Evidently a king over his subjects? Everyone I know hates to get up each day wondering what devastation will happen, knowing that something even more catastrophical, to doom all of us. This tyrant puppet and whoever is telling him what to do next are adamant that we, the serfs, feel more lost with each passing day. After all, ol’ sippy cup Joe (Sean Hannity’s nickname) will do what they say: he wanted to be president sooo desperately that he made a deal with the devil that he would carry out any malevolent, radical plan just to be king of the “Evilites”. He’s so afraid that he’ll “get in trouble”, o say “I am not supposed to answer that question”. I thought, he is the fraudulent president— he will get in trouble????? He is, you know an empty suit with no cognitive ability, right? He’s unable to do anything without his trusty words to read (by Rice, et al), or his cards ( you know, the ones he read from in that “Summit” with Putin, who had to hide his amusement and was salivating over what other goodies he could snatch away from the insipid ass Biden, in addition to the highly lucrative pipeline Biden gave Russia. Remember? Biden closed ours, which had made the U. S. lose the money, jobs, and independence our beloved SMART, President Trump gave us. Which side is Biden on? Doesn’t that make ol’ Joe a traitor? We have gone from a Trump Utopia to HELL itself.

  4. McRant

    June 23, 2021 at 9:58 am

    Firstly, I find it demeaning to be called the middle and low ‘class’ people. It is the middle and low income people. Slow Joe showing his racism again.
    Secondly, we have around 360 million people in the US. Only 180 million people pay any taxes at all. The people who don’t pay taxes are 65 million seniors/disabled on Soc.Secur, 45 million children, prisoners, minimum wage earners, people on public assistance including illegal aliens,most single moms,the unemployed, the basement dwellers, the homeless, those in shelters, and out lower-ranking military families. That’s taxpayers who pay their own taxes plus absorb the tax burdens of the poor.
    The upper 10% of taxpayers already pay 70% of the entire country’s tax burdens. They are already paying much more than their ‘fair share’ of taxes.
    Thirdly, I’d I owned a successful corporation or manufacturing plant, and I knew my taxes were going to double, I would move my company out of the US to a tax-friendly nation like the Cayman, hire cheap labor and make tons more money. The US government gets nothing and employees lose jobs and benefits. Great plan, financial wizard Gropes.
    And for you ‘low class people’, say your parents die. Their house, bought in the 60s for $14, 000, is now worth $180,000. Whee, a big break except you pay outrageous death taxes of up to 50% of the asset value.
    This is the great reset. Moving money and property from the middle/working income levels and giving more to the poor. The poor are happier, but now entitled. We are really pissed off because we worked for these things.We’re all serfs for the elite class: Soros, Clintons, Obamas, Comey, Brennan, fake news experts,the DOJ,the CIA, too military brass, the ‘entertainment industry’s, the public school system, teachers, unions.
    Dems lie about COVID, masking (100% inerrective against SARS type respiratory infections COVID which Fauci, knew from the start. In fact, masks are actually harmful both mentally and physically,especially for children.
    All a Marxist scam to steal the America.

  5. Mary

    June 23, 2021 at 11:29 pm

    I agree with all of the comments made before me. Biden is a Bimbo Bobble Head.

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Economy

New Research Suggests U.S. Already in a Recession That’s Only Getting Worse

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Recession

A Dartmouth professor warns not only has the United States slipped into a recession that is likely as bad as the 2008 financial meltdown, but that it is getting worse. David Blanchflower of Dartmouth, along with Alex Bryson, of University College London, “says that every slump since the 1980s has been foreshadowed by 10-point drops in consumer indices from the Conference Board and the University of Michigan” reports the Daily Mail.

The two professors authored a research paper released October 7 titled, “The Economics of Walking About and Predicting US Downturns” in which they state the dire prediction. “It seems to us that there is every likelihood that the US is entered recession at the end of 2021.”

In the paper’s ‘Abstract’ it states “the economic situation in 2021 is exceptional, however, since unprecedented direct government intervention in the labor market through furlough-type arrangements has enabled employment rates to recover quickly from the huge downturn in 2020.”

“However, downward movements in consumer expectations in the last six months suggest the economy in the United States is entering recession now (Autumn 2021) even though employment and wage growth figures suggest otherwise.”

In the introduction, the paper explains that “following the collective failure to predict the Great Recession of 2008 economists have redoubled their efforts to predict economic downturns.” This paper seeks “to see whether it is possible to predict turning points in the United States economy since the late 1970s using qualitative data for the United States from The Conference Board and the University of Michigan on consumer expectations.”

The research paper writes:

We identify four criteria to predict these recessions:
1.     Two out of three successive quarters of quarterly GDP growth are negative.
2.     There are two successive months of employment declines in the Current Population Survey (CPS) household-level data.
3.     The unemployment rate rises 0.3 percentage points in a single month.
4.     Either or both the two expectations measures we examine from The Conference Board and the University of Michigan fall by 10 points or more.

So, what is going on? The answer appears to lie in the exceptional nature of the COVID-induced shock to the economy. It has been both an economic shock and a health shock, and one with the potential to derail the economy again over the coming months. It seems likely that, in spite improvements in traditional labor market indicators, declining consumer expectations about the future of the economy are linked to COVID-related fears and anxieties. This is borne out by the survey by The Conference Board discussed above indicating a recent rise in the percent of workers – and especially women – worried about returning to the workplace for fear of contracting COVID- 19, a substantial increase from June 2021 when only 24% expressed this concern…

…We suspect that fears linked to COVID will continue to affect the real economy and lie behind consumer expectations about an imminent downturn in the economic situation. This is a bold call of course, and not consistent with consensus and only time will tell if we are right. However, equivalent falls in these data in 2007 were an early indicator of recession, missed at the time by policymakers and economists. There is a possibility of course, that these data are giving a false steer. However, missing the declines in these variables in 2007, as most policymakers and economists did, proved fatal. It is our hope such mistakes will not be repeated this time around. They missed it last time, hopefully, they won’t miss it this time. These qualitative data trends need to be taken seriously.

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Economy

Social Security Administration Announces 5.9% Benefits Increase for 2022 Amid Rising Inflation

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social security

On Wednesday the Social Security Administration announced some 70 million beneficiaries will be receiving a 5.9% increase in benefit checks beginning late December and January. The move is the “biggest cost-of-living adjustment (COLA) in 39 years” following “a burst in inflation as the economy struggles to shake off the drag of the coronavirus pandemic” reports the Associated Press.

Estimates released Wednesday suggest a roughly $92 per month increase for the average retired worker. “That marks an abrupt break from the long lull in inflation that saw cost-of-living adjustments averaging just 1.65% a year over the past 10 years,” writes the AP.

With the changes, an average Social Security payment could be around $1,657 per month, and a couple’s benefits could rise to $2,753 per month. The AP reports “the COLA affects household budgets for about 1 in 5 Americans. That includes Social Security recipients, disabled veterans and federal retirees, nearly 70 million people in all. For baby boomers who embarked on retirement within the past 15 years, it will be the biggest increase they’ve seen.”

However, the Washington Post reports that experts say millions of beneficiaries will see “much less” than a 6 percent increase due to Medicare Part B premiums, which are deducted from beneficiaries checks and tied to seniors’ income.

Roughly 64 million of those affected are Social Security beneficiaries, while 8 million are Supplemental Security Income beneficiaries and “some Americans receive both.” The increase is the “biggest since 1982 as the Social Security benefit increase has averaged about 1.7 percent over the last 10 years” writes National Review.

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