(FOX BUSINESS) – President Biden is expected to propose almost doubling the tax rate paid by wealthy investors when they sell stocks and other assets in his next big-ticket spending bill.
Under the forthcoming proposal, dubbed the American Families Plan, the capital gains tax rate could increase to 39.6% from 20% for Americans earning more than $1 million, a source familiar with the matter told FOX Business. Coupled with an existing Medicare surcharge, federal tax rates for the wealthy could climb as high as 43.4% – bringing the levy on returns on financial assets higher than rates on ordinary income.
Taxes on long-term capital gains – generally classified as an asset that’s held for more than one year – currently range from 0% to 20%, depending on a person’s income. Wealthier investors are also subject to an additional 3.8% tax on long- and short-term capital gains that’s used to fund ObamaCare. Short-term capital gains on assets sold within a year are typically taxed as ordinary income.
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