Biden Wants to Nearly Double the Capital Gains Tax
Democrat Presidential Candidate Joe Biden not only wants to return capital gains to Obama-era rates, but furthermore he would increase them while simultaneously returning the top rate on ordinary income. Biden has said, “I believe we should, in fact, the capital gains tax should be at what the highest minimum tax should be; we should raise the tax back to 39.6 percent instead of 20 percent.”
Add to that the 3.8% Obamacare tax (NIIT) instituted in 2013, and he would have some taxpayers effectively paying a 43.4% long-term capital gains tax! The current total top rate is 23.8%
Biden should know better. The actual impact of raising the capital gains rate by the Obama administration was devastating to the economy. By discouraging the sale of assets, there was reduced capital available for new projects and opportunities, reducing job creation and wages, and resulting in lower revenue collection. Furthermore, the expected after tax rate of return on new projects went down, assuring that fewer of them went forward.
Additionally, there were a number of localities, like the state of California and New York City, which have tax rates of 12% or more and also a large concentration of wealthy people and high performing businesses. Obama’s capital gains rates of more than 37% brought elective capital projects to a crawl. And Biden wants to raise them even higher?
Shame on Biden. Why sell an asset to fund further investment and opportunity when the government takes a large share of the gain with the loss remaining all yours? It makes virtually no economic sense to do so. A higher capital gains rate put a stranglehold on risk-taking and available capital, and would negatively impact the economy.