In the US, billionaires pay a significantly smaller portion of their wealth in taxes than ordinary Americans contribute from their wages. President Joe Biden aims to address this imbalance with his newly revealed budget for fiscal year 2025.
The Biden Administration unveiled its budget proposal for the 2025 fiscal year on March 11. Among its key features are tax proposals to boost revenues and cut spending by $4.3 trillion over the next decade.
These measures are designed to counterbalance other spending increases outlined in the budget, resulting in a net deficit reduction of $3.2 trillion over the decade. The most notable proposals involve raising taxes on corporations and high-income taxpayers.
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25% tax on unrealized gains has stock investors worried
The proposed capital gains tax hike, set at 44.6% and aimed at high-income earners, particularly those earning over $1 million annually, also includes a concerning 25% tax on unrealized gains. This provision has prompted many stock investors to ponder whether they should sell their holdings before the law is enacted.
However, it’s worth noting that, according to a report from tax analysts at the advisory firm Grant Thornton, Biden’s proposed 25% tax on unrealized gains would solely affect individual taxpayers with over $100 million in net assets.
Furthermore, in outlining the new tax plan, Biden assured that individuals earning less than $400,000 annually would not face tax hikes.
This policy seeks to create a more equitable balance between high-earning individuals from ordinary income and those from investment income, ensuring that wealthier individuals contribute a fairer share relative to their substantial financial activities.
The proposed tax plan might not even come to fruition
The proposed tax plan may encounter obstacles in the House of Representatives, where the Republican Party holds control. Historically, Republicans have been particularly conservative regarding tax and budget proposals, especially those put forward by the Democratic Party and its presidential candidates, as is the current situation.
Consequently, President Biden, his administration, and the Democratic Party face a challenge in passing this proposal.
