US President Joe Biden is reportedly set to propose a tax-increase on the wealthiest Americans.
The proposal would raise the highest marginal rate and increase taxes on investment gains for the rich. The tax rise would help buy childcare and education, but wouldn’t be used for healthcare, consistent with reports.
The news sparked a selloff on Wall Street, with major indexes slipping during Thursday’s trading session.
The White House said the American Family Plan, which Mr Biden is predicted lay out in full next week, won’t affect any family earning less than $400,000 a year.
“His view is that ought to get on the backs… of the wealthiest Americans who can afford it and corporations and businesses who can afford it,” said White House Press Secretary Jen Psaki. The proposal would increase the highest marginal tax rate to 39.6% from 37%, according to NY Times and Bloomberg.
The move would effectively reverse Donald Trump’s 2017 tax cut for highest income earners. The plan would also nearly double taxes on capital gains to 39.6% for people earning quite $1m.
It’s a dramatic increase from the present rate of 20%. In some states which impose their capital gains tax, the entire bill some investors could face might exceed 50%.
The plan is widely expected to encounter a resistance from Republicans in Congress. Although the Democrats hold a slim majority, they do’ll not support the plan unanimously. Nevertheless, the news was enough to cause a couple of jitters on Wall Street.
The Dow Jones Industrial Average fell 420 points before reigning in its losses slightly. “If it had an opportunity of passing, we’d be down 2,000 points,” Thomas Hayes, from Great Hill Capital told Reuters.
