Biden’s Tax Plan Would Soak the Rich to the Tune of Over 60 Percent

Comedian and impressionist Rich Little used to do a wonderful impression of President Jimmy Carter. One of his classic routines hilariously mimicked candidate Carter, who was waxing philosophically about his vision of our country under his leadership. It went something like this:

“I see a country where the rich willingly pay very high taxes for a vast welfare program…”

Then the routine went on with other idealistic visions like “I see a country where true social and economic justice can be achieved by all its citizens.”

The punch line was “I see Sweden.”

That was back in the 1970s. In 2019, it is actually Sweden. Swedish taxpayers in the highest income brackets pay a whopping 57.19 percent of their income to keep their welfare and social programs going—along with coping with over 772,000 immigrants from the Middle East since 2015. The numbers plummeted from 163,000 in 2016 to just over 80,000 in 2020 after Sweden tightened its immigration rules.

So, Joe Biden also may actually “see Sweden” with his own confiscatory income tax to soak the rich — minus the restricting immigration part. With the madcap goal of financing trillions of spending with just billions of taxes on the top few who already pay the most income tax, President Biden wants to target wealthy families with a combined tax rate of up to 61 percent.

The Biden tax plan with the ironic title of the American Families Plan closes a loophole that freezes in place unrealized capital gains. Also, the tax plan targets the capital gains of every successful investor as if it were normal income.

Now returns on capital gains are subject to a 20 percent tax rate. Biden and company want to raise that to a top marginal rate of 39.6 percent, which, added to the 3.8 percent net investment income tax, would tax investments at 43.4 percent.

Taking another cue from Great Britain, whose post WWII death taxes decimated the ranks of the rich, President Biden’s taxes on wealthy estate owners would, according to non-partisan Tax Foundation calculations, slam a $100 million estate with tax bills of $42.96 million in capital gains and $18.13 estate taxes. That would lead to the previously mentioned an effective tax rate of 61.1 percent.

The best way to discourage economic activity and investments is to tax it. While investors won’t stop putting their wealth to work, they will certainly find ways to legally dodge taxes. Economists at Penn Wharton, for example, suggested that mainly legal tax avoidance could whittle away over 90 percent of the estimated $1 trillion that government economists expect from a capital gains tax increase.

Biden’s tax plan is a 10-year initiative and faces an uphill battle for passage with the Democrats’ razor-thin majority. Even those in the President’s party are certain to push back on Biden’s capital gains tax increases. Republicans, of course, are 100 percent opposed. They want no part of Sweden.

In the meantime, tax and financial advisors for the wealthy are undoubtedly very busy doing what they do best: finding ways to protect their clients’ wealth.


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