U.S President Joe Biden prepares to almost double capital gains tax rate for the American wealthy to 39.6% in the next economic package, according to Bloomberg. Those earning $1 million and above could see their federal tax rate rise to as much as 43.4%.
The proposed 39.6% tax rate would be a major rise from the current 20% base rate.
The tax hikes will finance social spending that aims to address historic inequality.
Biden will still maintain the 3.8% tax on investment income that funds Obamacare.
The proposal is expected to reverse the provisions of the tax code that require tax returns on investment to be lower than on labor.
Biden could release the proposed changes next week
The proposals could attract Republican dissent, who have advocated retaining the 2017 tax cuts by Trump.
Congressional Democrats propose separate changes to capital gains tax, such as imposing levies each year rather than when assets are sold.
The tax increase on capital gains is projected to generate about $370 billion over a decade.
Market reacts to Biden’s proposal. S&P 500 yesterday’s close was 0.92%, DJI closed down 0.94%
