President Biden Set To Announce Higher Capital Gains Taxes For Wealthier Americans
MARY LOUISE KELLY, HOST:
The stock market continues to set records, and that has made many wealthy Americans even wealthier. Now, President Biden wants rich investors to pay more in taxes to help cover the cost of a massive spending bill he's planning to talk about tomorrow night. NPR's David Gura joins us now.
Hi there, David.
DAVID GURA, BYLINE: Hey, Mary Louise.
KELLY: All right. So what do we know about what exactly the president's going to propose tomorrow night?
GURA: Well, the administration says it wants to double the rate that millionaires pay on what are called capital gains. This is money they make when they sell assets, could be stocks, could be art. And as for who would pay more, I want to be clear. We're talking about Americans making more than a million dollars a year. And for a bit of context, that is a really small slice of the U.S. population. According to the White House, this would affect about half a million U.S. households. If you're in that bracket and you sell an asset, right now, the federal rate on the income from that transaction is 20%. President Biden wants to double that. He wants it to be about 40%.
KELLY: From 20- to 40%. OK. And what is the strategy here? Why is President Biden proposing this?
GURA: A couple of reasons. First of all, he has this big domestic agenda, and he is under a lot of pressure to propose ways to pay for the programs that are designed to help lower- and middle-income Americans. The second reason is something the president wants to do on principle. I talked about this with Howard Gleckman. He's a fellow at the Tax Policy Center.
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HOWARD GLECKMAN: In the campaign, candidate Biden was very explicit about what he wanted to do. His plan was to reduce taxes for low- and moderate-income people by about a trillion dollars, and he wanted to raise taxes on high-income people and corporations by about $3 trillion.
GURA: His first spending bill lessened the burden on many families with children. Now, the spotlight is kind of shifting to wealthy Americans. They're going to be looking for more details in that speech tomorrow night about how their taxes could change. And that could include changes to the tax on inherited wealth, what we call the estate tax.
KELLY: And what has been the reaction from the Americans who would be directly impacted? As you noted, it's not a huge slice, but it's a slice that tends to have some clout.
GURA: Yeah. When investors read reports this was going to be part of the president's plan, there was this knee-jerk reaction on Wall Street. That didn't last. The markets recouped some losses last week. Elda Deray (ph) is a tax adviser, and she tells me there are going to be wealthy Americans who are going to see this news, and their impulse is going to be just to wait it out.
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ELDA DERAY: If you don't need the cash, don't pull the trigger. And tax policy changes with changes in administration. So this could dry up the flow of cash on capital gains transactions.
GURA: Now lawmakers have changed the tax rate on capital gains a bunch of times. And really, there's a lot that we don't know about what's going to happen next. This is, of course, a proposal from the president, and it's up to Congress, Mary Louise, to decide what the tax rates are going to be.
KELLY: All righty (ph). Thank you, David.
GURA: Thank you.
KELLY: NPR's David Gura. Transcript provided by NPR, Copyright NPR.