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President Joe Biden has already vowed to slam the recovering US economy by hiking taxes on higher earners and raising corporate tax rates. Now comes news he wants to double the capital-gains tax rate — to drop yet more cash on Democratic special interests and fund a huge expansion of government.
This, on top of the trillions in outlays he’s already proposed.
Next week, Biden will officially release plans to tax capital gains as ordinary income for those making over $1 million. He also wants to raise the top tax rate from 37 percent to 39.6 percent, so that’s basically doubling these people’s cap-gains rate from the current 20 percent.
Add the existing 3.8 percent surtax that helps fund ObamaCare, and sales of investments would be taxed at 43.4 percent, far higher than the top rate on wages. In New York, the combined state and federal capital-gains rate could end up at 52.22 percent.
Stocks immediately fell on the news, with the Dow Jones and the S&P 500 both losing almost 1 percent Thursday after trading higher thanks to better-than-expected employment numbers.
White House Press Secretary Jen Psaki wouldn’t confirm the rumors but noted Biden believes his spending plans can be paid for “on the backs of the wealthiest Americans who can afford it and corporations and businesses who can afford it,” insisting tax hikes “won’t have a negative impact.”
That’s wishful thinking. Businesses pass on tax hikes to their customers while higher-taxed investors will have less money to put into job-creating enterprises. “A rate increase this large would be expected to slow long-term growth,” Rice University’s John Diamond told The Wall Street Journal. “I don’t think it’s a story of just ‘Hey, we’re taxing the rich and no one else gets hurt by this.’” It’s likely to do real damage to all of America, especially coupled with Biden’s planned corporate-tax hike.
Capital gains have been taxed at lower rates than wages for most of US history, and for many reasons. Some of the yearly “gains” are really just the result of inflation, and most profits have already been subject to corporate taxes.
And what does Biden plan to do with the new receipts? Dedicate them to his coming $1.5 trillion-plus “American Family Plan,” which boils down to a vast expansion of federal social spending — thereby vastly expanding the ranks of unionized employees of governments at all levels as well as allied nonprofit service providers.
It’d also extend to 2025 a temporary “COVID relief” program that sends many parents — including those who don’t work — $300 a month for every child under 6 and $250 for each older kid.
This all follows his $2.3 trillion first-phase “infrastructure” plan that spends more on juicing union membership — including $400 billion for an expansion of Medicaid home-care workers — and on Green New Deal nonsense than it does on roads and bridges.
The overwhelming winner from this spending spree would be Democratic interests — which is exactly what Biden wants.
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