The American Families Plan, proposed by President Biden is looking at offsetting the expenditures by bringing in multiple changes in the rules and increasing the tax on the Americans. The plan proposes to increase income taxes and capital gains taxes so that the government can eliminate the loopholes in the system and fund the plan.
There are many revenue generating ideas that have been put forth by the President Biden government. They intend to tax the rich heavily and close the income gap. They want the income tax rate to be back up to its highest level as it was before 2018. The rate of 39.6 percent existed pre 2018 for people earning over $400,000. The current administration has planned such other spike in taxes to raise more than 1.5 trillion dollars in the next 10 years.
This time the tax rate will be increased to 43.4 percent for people with incomes of $1 million that includes the 39.6 percent income tax and the investment income surtax of 3.8 percent. It will be huge for high earning individuals who will have to pay high taxes. Currently the tax imposed on them is 23.8 percent on long term capital gains. Under the proposed plan, with federal and average state tax rate on capital gains combined, the wealthy individuals will have to pay 48.6 percent under the plan.
The plan will also be affecting how capital assets are taxed after the death of an individual leaving a large inheritance. When the proposal is passed many of the wealthy Americans will not be able to pass stocks, real estate, and such other capital assets to the heirs without paying the capital gains tax on them.
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