Under Biden's plan, the top rate on long-term gains would nearly double from 23.8 percent to 43.4 percent. The Tax Foundation estimates that increasing capital gains taxes in the fashion suggested by Biden would result in just $469.4 billion in revenue over 10 years. @themotleyfool #stocks, http://www.crfb.org/papers/understanding-joe-bidens-2020-tax-plan, The Perfect Pick for High-Growth Stock Investors in 2021, SMART Global Holdings, Inc. (SGH) Q1 2021 Earnings Call Transcript, DoorDash Gains a Major Supermarket Client for Deliveries, Oil Price Jumps to Nearly Year-High Level Above $50, Why Shares of American Airlines Gained Altitude in December, Copyright, Trademark and Patent Information. President-elect Joe Biden has announced a tax plan that departs significantly from the policies and impact of major tax revisions proposed by President Trump and … And Biden has very little to do with this part. ", Dillian also warns, "If Biden wins, any new tax legislation probably wouldn't take effect until 2022. receive the latest by email: subscribe to the free futureofcapitalism.com mailing list. Now that we've discussed when Biden's proposed tax changes could happen, it's important to take a step back and consider whether they're likely to happen. If Biden’s proposal were to become law, heirs would pay capital gains on anything over $300,000. Former Vice President Joe Biden says he would tax investors by raising the capital gains tax, now 15 percent or 20 percent on the sale of most assets, to 40 percent. Joe Biden's planned capital-gains tax may put immediate selling pressure on stocks, according to Goldman Sachs. Stock Advisor launched in February of 2002. That is a radical proposal. Under Biden's proposal, unrealized capital gains would be taxed at 43.4% at death -- a rate that includes taxing those gains at ordinary income tax rates, which he's vowed to raise to 39.6%. The money raised would go to programs for the middle class. This means that investors will hold onto a stock for tax reasons, rather than selling it and buying a better one, which leads to market inefficiencies. And he would do this in a few ways. Expand the estate and gift tax. Matt is a Certified Financial Planner based in South Carolina who has been writing for The Motley Fool since 2012. On his website he said he would also raise the top rate on ordinary income back up to 39.6 percent from the 37 percent rate put in place by the Tax Cuts and Jobs Act . Grover Norquist of Americans for Tax Reform on what taxes for the average American could look like under a Biden administration. The rich would also face higher capital gains tax rates under Biden's proposal. He has also proposed increasing the top marginal income tax rate to 39.6 percent. Biden’s plan would first raise taxes on capital gains by treating them as ordinary income for those earning more than $1 million. Biden shouldn't have much of a problem in the House of Representatives -- it is controlled by Democrats and nothing Biden has proposed is too radical to attract significant opposition from within his own party. Currently, these gains are taxed differently from income, at a rate of either 0%, 15% or 20%, depending on your tax bracket. Returns as of 01/06/2021. New research from Princeton University economist Owen Zidar suggests that capital-gains tax hikes may raise more revenue than previously estimated. Biden wants to increase the Child Tax Credit to $3,000 per qualifying child from the current $2,000 level and add a $600 bonus credit for children under six. ", And Institutional Investor reports comments by Citadel's Ken Griffin, also warning about the lock-in effect: "When taxes are at 39 percent, you're not going to sell your winners. Tax may put immediate selling pressure on stocks, REITs, and that 's a big if! 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