(PatriotNews.net) – Biden’s pitch to hike capital gains taxes has sparked major backlash, with critics warning it could severely harm the U.S. economy.
Under President Biden’s proposed fiscal year 2025 budget, the top capital gains tax rate could soar to 44.6%, a figure not seen since the early 1920s. Experts argue this move could stifle investment and economic growth.
As per the Treasury Department, increasing the tax rate to 44.6% could potentially hinder future investment. The Treasury Department’s report explains that this rate includes various proposals, such as increasing the top ordinary capital gains rate from 20% to 37%. The majority of the tax raises would impact Americans who earn taxable income surpassing $1 million. The proposed tax hike targets small business owners and investors alike.
If investors were to realize a long-term gain of $100,000, they might end up owing $54,000 of that amount in federal and state taxes in certain states.
E.J. Antoni, an economist and research fellow at The Heritage Foundation, emphasized the importance of investment for economic prosperity. He highlighted that heavy taxation on investment can deter it, resulting in slower growth and lower standards of living.
Antoni also pointed out a concerning ripple effect. Higher taxes could incentivize policymakers to maintain high inflation rates to secure more significant tax revenues.
Mike Palicz, the director of federal tax policy at Americans for Tax Reform, cautioned that Biden’s proposal to raise the top capital gains rate to 44.6% is perilous. He argued that it would effectively penalize individuals’ savings and investments, undermining their American dream.
The proposal’s impact could extend beyond federal taxes. In states like California and New York, residents could face combined rates exceeding 50%, possibly triggering a migration to more tax-friendly locales.
Finance expert Kevin Thompson emphasized that such a tax hike would have dire consequences. He suggested that investors might flee markets in search of lower tax rates elsewhere, placing the burden of this policy on residents in high-tax states.
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