MORE MONEY What is capital gains tax?
PRESIDENT Joe Biden is seeking to double the capital gains tax rate for wealthy individuals to help fund education and child care.
The most common types of capital gains come from the sale of stocks, bonds, real estate, and property.
What is capital gains tax?
A capital gains tax is a tax on the profit made on the sale of a non-inventory asset.
If the profit is lower than this limit it is considered tax-free.
Profit is determined by the difference between the amount (or value) an asset is sold and the amount it was bought for.
The tax rate of a capital gains tax depends on profit made and how much money someone makes annually.
Is Joe Biden going to raise the capital gains tax?
As part of an economic plan, Biden is reportedly trying to increase the capital gains tax to 39.6% from 20% for Americans earning more than $1 million, according to Bloomberg.
The proposal would follow through with Biden’s campaign promise that would require the wealthiests in the country to contribute more of their income.
The plan would level the income tax rate and the capital gains tax to 37%.
Biden has yet to make the formal announcement but is expected to release the proposal the week of April 26, 2021.
The proposal will reportedly help fund spending for the American Families Plan, which is expected to cost about $1trillion.
Chuck Grassley of Iowa, a top Republican on the Senate Finance Committee and former chair of that panel, opposes Biden’s plan, saying: “It’s going to cut down on investment and cause unemployment. If it ain’t broke, don’t fix it.”
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What does the capital gains tax plan entail?
The plan will reportedly include spending on children and education, especially making community college tuition free for all.
It will also include a temporary extension of an expanded child tax credit, giving parents up to $300 a month for children younger than six, and $250 for those older.
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