House Democrats plan to raise capital gains tax to pay for Biden spending program

HAmerica’s Democrats are plotting to raise the capital gains rate as one of several mechanisms to raise billions of dollars for their new spending program.

The current proposal is that the capital gains rate for high income earners be raised from 20% to 25%, a number that falls short of President Joe Biden’s original proposal to increase the rate by nearly double to 39.6%.

Factoring in an existing Obamacare surtax on investment income, people earning more than $ 1 million would pay an effective rate of 28.8%. By raising the capital gains rate, Democrats hope to raise $ 123 billion, according to a fact sheet that leaked to the media.

BEST DEMOCRATS OFFER SHARE BUYBACK TAX HIKES AND PARTNERSHIPS TO FINANCE ALL EXPENSES

The increase in capital gains is more modest than initially proposed. The lower than expected rate is also a sign of fears that more centrist members of the party will be reluctant to vote on the legislation if its tax revisions are more drastic.

The capital gains tax hike is one of many income-boosting measures Democrats are considering introducing.

Democrats also want to increase the top tax rate for individuals earning more than $ 400,000 a year to 39.6%, from 37% currently. This would also apply to married couples who jointly deposit more than $ 450,000 per year.

The leadership also wants to increase the corporate tax rate to 26.5% from 21%, which is also reduced compared to the original White House proposal to increase the corporate tax rate to 28%.

Democrats need every vote they have in the Senate and cannot afford to waste more than a few votes in the House to pass the legislation.

In addition to increasing income through increased tax enforcement, the party is also proposing a new surtax for those earning more than $ 5 million. These employees would pay an additional tax of 3%, which would bring in about 127 billion dollars.

In total, Democrats believe the entire menu of tax proposals would raise some $ 2.9 trillion over the next decade. They believe that the full $ 3.5 trillion would be paid out during dynamic scoring, the idea that policy changes would accelerate economic growth and allow the government to collect increased revenues from that prosperity, is taken into account.

While the spending package quickly falls into place, there is still a long way to go before it hits a final bill on the president’s desk.

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Some more centrist Democrats have expressed hesitation over the possible price of the bill and hope to see it paid. Senator Joe Manchin said he thought the $ 3.5 trillion price tag was too high and signaled that he would be more inclined to vote for a reduced package that is in the neighborhood of $ 1.5 trillion.

The West Virginia Democrat’s unease with the massive spending envelope generated backlash within his own party, with Independent Senator Bernie Sanders of Vermont calling his colleague’s position “unacceptable.”

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