How high will Biden raise capital gains taxes? Bloomberg Tax reported that the White House wants to raise taxes on investment income to 43.4 percent, sending the stock market into a tizzy. A year ago, Biden said he’d raise capital gains taxes to match his proposed new top rate on ordinary income of 39.6 percent for households making more than $1 million. But yesterday’s report suggested he’d raise the top rate on gains to 39.6 percent plus the Affordable Care Act’s 3.8 percent net investment income tax. Long-term capital gains currently are taxed at 20 percent plus the 3.8 percent surtax for those making $250,000 of more.
Senate Republicans have an infrastructure framework. They have countered Biden $2.2 trillion plan with a $568 billion proposal focused nearly entirely on traditional public infrastructure. About half would go for roads and bridges and $65 billion for broadband Internet. The plan includes no details on pay-fors.
What’s next for Opportunity Zones? Biden promised to overhaul the program, which critics say has primarily offered tax benefits to wealthy real estate investors and fueled development already-gentrifying neighborhoods. The administration has not yet provided any details of its reform plans. The Urban Institute’s Brett Theodos told The New York Times, “It’s hard to see any evidence that low- and moderate-income people are benefiting from this incentive. The Biden administration right now could…make this program work a lot better for communities.”
In Washington State: The House passed a capital gains tax. The chamber approved a 7 percent tax on capital gains of at least $250,000 for individual and joint filers by a narrow 52-46 margin. The bill excludes from tax the sale of all real estate and certain qualified family-owned small businesses. The Senate will consider the measure, which includes an emergency clause that prevents it from being repealed in a voter referendum.
Connecticut lawmakers propose tax hikes on the wealthy and a new tax on online advertising. Democrats in the state’s General Assembly are pushing a $700 million tax increase on households with incomes with federal adjusted gross incomes $500,000 or more. The rate would start at 0.7 percent and rise to 1.5 percent for taxpayers with federal AGIs of $13 million or more. The plan also would raise the capital gains tax and impose a new tax on social media advertising. Republicans and Democratic Governor Ned Lamont oppose the tax hikes on high-income households.
Montana, meanwhile, has tax cut plans. Republican lawmakers are finalizing a multimillion dollar tax cut package that likely would cut income and property taxes. One component that passed this week would reduce the top income tax rate from 6.9 percent to 6.75 percent starting in 2022, followed by another reduction to 6.5 percent in 2023. Lawmakers will vote in the coming week on bills to eliminate business equipment property taxes for smaller business, raise property tax credits for older homeowners, and reduce property taxes that fund public schools. The tax cuts could total as much as $50 million annually.
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