The Biden administration has proposed the highest top capital gains tax in over a century.
According to Biden’s 2025 budget proposal the top marginal rate on long-term capital gains and qualified dividends would rise to 44.6%.
The proposal, which marks the highest tax increase since the creation of the capital gains tax in 1922, could significantly curtail the financial returns of investors in stocks and crypto.
“For example, a taxpayer with $1,100,000 in taxable income of which $200,000 is preferential capital income would have $100,000 of capital income taxed at the preferential rate and $100,000 taxed at ordinary rates,” the proposal states.
Additionally, the proposal when combined with state capital gains tax would exceed 50% in many (mostly blue) states and would not account for inflation’s erosion of purchasing power.
From Americans for Tax Reform:
Under the Biden proposal, the combined federal-state capital gains tax exceeds 50% in many states. California will face a combined federal-state rate of 59%, New Jersey 55.3%, Oregon at 54.5%, Minnesota at 54.4%, and New York state at 53.4%.
Worse, capital gains are not indexed to inflation. So Americans already get stuck paying tax on some “gains” that are not real. It is a tax on inflation, something created by Washington and then taxed by Washington. Biden’s high inflation makes this especially painful.
Many hard working couples who started a small business at age 25 who now wish to sell the business at age 65 will face the Biden proposed 44.6% top rate, plus state capital gains taxes. And much of that “gain” isn’t real due to inflation. But they’ll owe tax on it.
The advocacy group also noted that Biden’s tax proposal dwarfs Communist China’s top capital gains tax, which is 20%.
If that wasn’t enough, the 2025 budget also includes a second Death Tax that would essentially enforce a mandatory capital gains tax at death, an initiative that Congress tried and failed to implement in 1979 because it was “impossibly unworkable,” according to The New York Times.
“Almost immediately, however, the new law touched off a flood of complaints as unfair and impossibly unworkable. So many, in fact, that last year Congress retroactively delayed the law’s effective date until 1980 while it struggled again with the issue.“
“Not only were there protests from people who expected the tax to fall on them — family businesses and farms, in particular — bankers and estate lawyers also complained that the rule was a nightmare of paperwork.“
Biden is proposing a 44.6% capital gains tax, the highest ever, previously set by Jimmy Carter.
Here's how that worked out for Jimmy Carter: pic.twitter.com/UFiiPl6Skb
— Joe Consorti
(@JoeConsorti) April 24, 2024
In all, Biden’s 2025 budget calls for about $5 trillion in tax increases over the next decade.
Meanwhile, Biden also vowed on Tuesday not to cut any more taxes after Trump’s tax cuts expire in 2025.
“If I’m reelected, it’s going to stay expired,” his account posted on X.
Donald Trump was very proud of his $2 trillion tax cut that overwhelmingly benefited the wealthy and biggest corporations and exploded the federal debt.
That tax cut is going to expire.
If I’m reelected, it’s going to stay expired.
— Joe Biden (@JoeBiden) April 23, 2024