Joe Biden Proposes 44.6 percent Capital Gains Tax Rate
President Biden has officially presented a proposal for the highest top capital gains tax rate in over 100 years.
Biden's Tax Proposal
In the Biden 2025 budget proposal, it states, "Together, the proposals would increase the top marginal rate on long-term capital gains and qualified dividends to 44.6 percent."
Yes, you read that correctly: A Biden top capital gains and dividends tax rate of 44.6%.
State-Specific Implications
Under Biden's plan, the combined federal-state capital gains tax rate surpasses 50% in numerous states. California faces a combined rate of 59%, New Jersey 55.3%, Oregon 54.5%, Minnesota 54.4%, and New York state 53.4%.
Moreover, capital gains are not indexed to inflation, leading to taxation on gains that may not reflect real value, particularly in times of high inflation.
Comparison and Historical Context
Biden's proposed top capital gains tax rate is significantly higher than China's 20% rate. This raises questions about competitiveness and economic impact.
The capital gains tax, established in 1922 at a rate of 12.5%, has evolved dramatically. Biden's proposal marks a significant shift in tax policy, entering uncharted territory in terms of historical rates.
Impact on Families
The proposed tax hike extends beyond individuals to families, especially during inheritance. Biden's plan includes a second Death Tax, eliminating stepped-up basis upon inheritance, resulting in mandatory capital gains tax at death.
Previous attempts to eliminate stepped-up basis faced challenges due to complexity and unworkability, leading to its repeal before implementation.
Further Information and Analysis
For deeper insights into tax proposals and their implications on investments and financial planning, consider exploring:
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