With every new administration comes a new vision for policy and every President wants to make a statement. After President Trump’s sweeping tax cuts in 2017 it appears that President Biden is planning the largest tax hike in almost 30 years. As clarified by the White House Press Secretary Jen Psaki Biden’s statement that “no one making less than $400,000 will see thor taxes go up” was partially correct. Psaki said yesterday during the daily White House press briefing that the $400,000 threshold is for “families” therefore joint filers with a combined income of over $400,000 will see an increase in their tax bill under Biden’s proposed plan.
Perhaps the most important thing for investors to note is the plan to increase the tax on capital gains. Biden wants to tax capital gains as regular income with a top tax rate of 39.6% — for earners making more than $1,000,000 annually. Plans to expand the estate tax to 45% are also being discussed.
What about corporations? Well the simple answer is corporate taxes are going up. The current aim is a 7% increase from the current 21% rate to 28%. The corporate tax rate was reduced under President Trump much to the dismay of politicians in the Democratic party. Now that Democrats control both branches of the Legislature as well as the White House they are adamant about ensuring corporations, as Jen Psaki stated “pay their fair share”.