President Joe Biden’s coming proposal to ramp up the capital gains tax would hit both individuals earning $1 million and married couples filing jointly earning the same amount, according to a White House official.
The official’s clarification came after Biden’s top economic adviser, Brian Deese, said Monday that one element of Biden’s plan would be a change in capital gains taxes.
“This change will affect taxpayers making more than $1 million a year,” Deese, the director of the National Economic Council, said at a press briefing Monday, without specifying whether he was referring to individuals or married couples.
Biden is set on Wednesday to unveil his “American Families Plan,” featuring major new social-spending measures that would be funded in part by higher taxes on the wealthy. Deese briefed on just one element of the plan Monday after criticism from Republicans about the White House’s reported push to almost double the capital gains tax for top earners.
Deese described the capital gains increase as affecting “three-tenths of a percent of taxpayers,” or about 500,000 U.S. households.
“The reforms that the president will lay out are focused on this top sliver of people, and treating capital gains the same as wages for that top three-tenths of a percent,” Deese said. “And we believe that it’s not only fair, but it would also help to reduce the kinds of tax avoidance that significantly undermines trust and fairness in the tax code itself.”
Market Reaction
Bloomberg reported last week that the White House is planning to almost double the capital gains tax rate for wealthy individuals to 39.6%, compared with the 20% rate today. Along with a surtax to help pay for Obamacare, it means that federal tax rates for wealthy investors could be as high as 43.4%.
Republicans have criticized the idea as economically damaging, saying it would lead to weaker investment. Stocks slid Thursday on the news of the plan, though recovered Friday. The S&P 500 Index was up 0.2% on Monday.
Goldman Sachs Group Inc., drawing on Federal Reserve data, estimates that the wealthiest households now hold $1 trillion to $1.5 trillion in unrealized capital gains on equities. That’s roughly 3% of U.S. stock market capitalization.