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President Biden calls for 44.6% capital gains tax

In March, President Biden proposed a 44.6% capital gains tax in the government’s 2025 budget, the highest in history. The proposal includes a 25% tax on unrealized profits for wealthy individuals. A quote from the March budget proposal reads: “Together, the proposals would increase the top marginal rate on long-term capital gains and qualified dividends to 44.6 percent.”

The source of the 44.6% rate is a footnote from the General Explanations to the Government’s 2025 fiscal year revenue proposals, which states in relevant part: “A separate proposal would first increase the top ordinary rate to 39.6 percent… An additional proposal would increase the rate to 39.6 percent. the net income tax rate on investments by 1.2 percentage points above $400,000… Together, the proposals would increase the top marginal rate on long-term capital gains and qualified dividends to 44.6 percent.” The White House looks forward to the proposal to increase long-term earnings and qualified dividends for taxpayers.

How will Biden’s proposed capital tax rate impact the upper class?

However, the proposed interest rate increase is not guaranteed. The 44.6% rate would only come under a separate proposal from the Biden administration’s main capital gains increase. Additionally, it will only apply to individuals with taxable income over $1 million and investment income over $400,000. Therefore, high earners are the main targets of the proposal.

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The policy is aimed at creating a level playing field between people with a high ordinary income and people who receive income from investments. It aims to ensure that high earners can contribute a fairer share in relation to their enormous financial undertakings. While this may not appeal to the wealthy, it certainly helps provide reassurance to the US working class, which has already seen interest rates and taxes rise over the past year. The higher capital gains taxes for upper class citizens could also ease the bills of the lower class, something President Biden’s administration has been promising for years.