Biden’s budget proposal would hike taxes on investors, businesses

investmentnews.com:

President Joe Biden’s budget proposal — which calls for sweeping tax increases on corporations and the wealthy — is the opening round of a looming tax fight set to consume Washington next year.

Congress will be forced into tough negotiations over the future of the tax code, with large portions of former President Donald Trump’s 2017 cuts set to expire at the end of 2025. Many lower- and middle-income households will see a tax increase if lawmakers don’t act, providing motivation for both Democrats and Republicans. 

Trump has vowed to push for the “biggest tax cuts” ever if returned to power. Biden, meanwhile, is seeking higher levies on large businesses and investors, while preserving some of his rival’s cuts.

Here are details on the tax proposals in Biden’s budget request released Monday:

CAPITAL GAINS

The budget proposal would increase the capital-gains tax rate to equalize the taxation of investment and wage income. That would mean capital gains for those earning at least $1 million would be taxed at a base rate of 39.6 percent, up from 20 percent.

Biden is proposing to increase the 3.8 percent Medicare tax to 5 percent for those earning at least $400,000 to shore up the program’s trust fund. That would mean the richest taxpayers would pay a 44.6 percent federal rate on investment income and other earnings.

The plan also calls for taxing assets when an owner dies, ending a benefit that allowed the unrealized appreciation to go untaxed when transferred to an heir.

BILLIONAIRES TAX

Biden is proposing a 25 percent minimum tax rate on households worth at least $100 million, hitting many of the richest Americans — who currently pay an 8 percent rate on their incomes because of tax preferences that allow them to reduce