Is it fair to tax anyone at more than 50%? Shouldn’t tax policy aimed a higher income Americans consider the consequences on average Americans?
This week was all about speculation President Biden will propose almost doubling the long-term capital gains tax rate from 20% to 39.6% for people who earn more than $1 million a year. Add on the Net Investment Income Tax of 3.8%, and we’re talking a total long-term capital gains tax rate of 43.4%.Source: Financial Samurai
Given this tax hike speculation, stock indices immediately dropped intraday following the news. Therefore, even if you aren’t one of the estimated 0.35% of Americans who make over $1 million a year, there is a chance you may be negatively affected by this tax hike.
If this new long-term capital gains tax gets approved, qualifying residents in California would pay a 56.7% combined state & Federal tax rate, 54.1% for New Jersey, and 58.2% for New York. At the margin, people in these states with such means will relocate, take profits before the tax hikes, or find other ways to avoid taxes.Source: Financial Samurai