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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

Atlanta Fed’s GDP Tracker Shows United States May Be In A Recession

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Joe Biden

The United States has likely entered a recession, according to the Federal Reserve’s key gauge for measuring economic activity.

The Atlanta Fed’s GDPNow measure, which tracks economic data in real time and continuously adjusts projections, says that the United States economy will shrink by 2.1% in the second quarter. A 2.1% contraction in the second quarter paired with the first quarter’s decline of 1.6% would meet the definition of a recession.

“GDPNow has a strong track record, and the closer we get to July 28th’s release [of the initial Q2 GDP estimate] the more accurate it becomes,” wrote Nicholas Colas, co-founder of DataTrek Research.

The tracker fell dramatically last week from an estimate of 0.3% after data “showing further weakness in consumer spending and inflation-adjusted domestic investment prompted the cut that put the April-through-June period into negative territory,” CNBC reported.

“One big change in the quarter has been rising interest rates,” CNBC added. “In an effort to curb surging inflation, the Fed has jacked up its benchmark borrowing rate by 1.5 percentage points since March, with more increases likely to come through the remainder of the year and perhaps into 2023.”

Last week, Federal Reserve Chairman Jerome Powell warned that the decision to fight inflation by increasing interest rates was “highly likely” to cause pain to Americans.

During the European Central Bank forum, host Francine Laqua asked Powell, “If you’re speaking out to the American people to try and help them understand how long it will take for, you know, monetary policy to go back to something that resembles normalcy … what would you tell them?”

“I would say that we fully understand and appreciate … the pain people are going through dealing with higher inflation, that we have the tools to address that and the resolve to use them, and that we are committed to and will succeed in getting inflation down to two percent,” Powell responded.

“The process is likely, highly likely to involve some pain, but the worst pain would be from failing to address this high inflation and allowing it to become persistent,” he added.

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Economy

Biden’s Fed Chairman: Solving Inflation ‘Highly Likely To Involve Some Pain’ For Americans

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On Wednesday, Federal Reserve Chairman Jerome Powell said that solving the inflation crisis is “highly likely” to cause pain to Americans but that it would be less painful than not addressing inflation.

During the European Central Bank forum, host Francine Laqua asked Powell, “If you’re speaking out to the American people to try and help them understand how long it will take for, you know, monetary policy to go back to something that resembles normalcy … what would you tell them?

“I would say that we fully understand and appreciate … the pain people are going through dealing with higher inflation, that we have the tools to address that and the resolve to use them, and that we are committed to and will succeed in getting inflation down to two percent,” he responded.

“The process is likely, highly likely to involve some pain, but the worst pain would be from failing to address this high inflation and allowing it to become persistent,” Powell added.

Powell’s comments come as inflation has reached the highest rate in more than 40 years with prices rising 8.6% from May 2021 to May 2022, according to a new report from the Bureau of Labor Statistics.

In order to bring down inflation, the Federal Reserve increased the interest rate by 0.75% earlier this month – the highest increase since 1994 – and warned of additional increases in the interest rate in the future.

“The three-quarter-point hike brings the federal funds rate to between 1.5% and 1.75%. The federal funds rate dictates what it costs for banks to borrow money from each other. And, generally, higher interest rates mean it’s more expensive for consumers to get a mortgage, obtain a loan to buy a vehicle and to carry a balance on a credit card,” NBC News reported. “The expected effect of these changes is that consumers will spend less and the heightened demand for goods — one of the drivers of inflation — will slow down.”

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