The Biden administration has recently made a proposition for several tax increases to America’s highest-earning individuals. These proposals were part of President Biden’s annual budget request that he presents to congress.
Overview
The White House is currently coming up with a $3 trillion plan to reduce the debt deficit. At the center of this plan are the president’s new tax proposals that some politicians consider to be quite drastic.
One of the larger proposals made by Biden is to double the rate of the capital gains tax. Additionally, he also proposed additional surcharges for Medicare to receive funding. Ultimately, this means that taxes on investments made by taxpayers could increase to roughly 45%.
Capital Gains
Biden’s new proposal would ultimately cause the capital-gains tax rate to increase from 20% to almost 40%! Additionally, the president is calling for those who earn at least $400,000 to pay a 5% Obamacare tax rather than the standard 3.8%. This is part of Biden’s effort to increase the Medicare Trust Fund amount. If these plans are put into action, the wealthiest taxpayers would have to pay the federal government a 44.6% tax rate on investment income as well as other earnings.
Tax on Billionaires
Another Biden proposal included a minimum tax rate of 25% on American households making at least $100 million combined. That group ultimately makes up well less than 1% of United States taxpayers. This means that the country’s richest taxpayers would face an extreme tax increase if this proposition goes into law.
Increased Income Taxes
The president proposed to congress that the income tax rate for those who make over $400,000 be raised by 2.6%. This would change the rate from 37% to 39.6%. This particular proposal could reverse a potential tax cut that the Trump administration signed into law.
No More Corporate Tax Cuts
The corporate tax cuts that were signed into law by President Trump in 2017 will decrease from a whopping 28% to 21%, in Biden’s new proposal. Additionally, the proposition also calls for U.S. companies to be taxed over 50% more on foreign earnings, going from 10.5% to 21%.
Wrap Up
Biden’s new budget proposal ultimately gives a lot more people a larger tax burden. In particular, middle-class and wealthy Americans could feel this impact most. As well as millionaires who could potentially pay more taxes than they ever had to before. Time will tell if these proposals made by the president will eventually be signed into law.