(Texas News Today) - The White House has demanded a maximum federal tax rate of 39.6% on long-term capital gains and dividends. This is almost double the current 20%.
Long-term capital gains taxes apply to assets such as stocks and homes that have increased value and have been owned for at least one year. Taxpayers borrow money with gratitude when selling their assets. Dividend tax applies to the distribution of profits that a company brings to its shareholders.
Biden’s policy applies only to the wealthiest Americans, the top 0.3%, or Americans with an income of $ 1 million or more. This is one of the highest capital gains and dividend rates in developed countries.
However, the Houseways and Means Commission law announced on Monday will tax capital gains and dividends at a much lower maximum tax rate of 25%. The House proposal applies to single filers with at least $ 400,000 in income and couples with $ 450,000.
In other words, Biden’s plan will raise the highest federal tax rate for the wealthiest Americans by 98% (compared to current legislation), while House’s proposal will raise it by 25%. House plans will also raise taxes for a wider range of people.
“This change is great for the ultra-rich,” wrote Jeffrey Levine, an accountant and chief planning officer at Buckingham Wealth Partners, a certified financial planner. Tweet..
“But for’just’ wealthy taxpayers? Not so many,” he added.
The existing 3.8% Medicare surcharge and state tax will be incurred in addition to the federal tax rate change.
Investment income
HNWIs earn more from their investments than their wages, compared to low- and middle-income earners.
For example, the top 0.1% who earn more than $ 3.4 million receive more than half of their annual income from capital gains, dividends and interest.According to the Tax Policy Center, a quarter comes from wages and allowances Analysis from 2019.
By John Paul
