The proposal includes substantial measures to raise taxes for the rich. Taxable income above $ 450,000 – or $ 400,000 for unmarried people – would be taxed at 39.6%, the highest rate before President Donald J. Trump’s 2017 tax cut brought it to the fore. at 37%. The highest rate of capital gains would drop from 20% to 25%, considerably lower than a White House proposal that would have taxed investment gains as income for the richest, to 39.6%.
According to the committee’s plan, a 3% surtax would be applied to revenues over $ 5 million. The value of estates protected from inheritance tax, which has doubled to $ 24 million for married couples under Republican tax cuts in 2017, would drop to $ 12 million by the end of this year , four years before the expected expiration.
The proposal would also raise taxes in various ways on businesses called flow-through entities – like many law firms and financial companies – that distribute profits to their owners, who then pay personal income taxes. These changes, including extending an existing 3.8% surtax to include transferred income, would increase taxes primarily on high earners, generating several hundred billion dollars in income, Democratic estimates say.
The joint committee estimated on Monday that the changes would bring in about $ 1 trillion for those with higher incomes.
Republicans hesitated at the proposal. Business lobby groups rejected the package, with the US Chamber of Commerce calling it “an existential threat to America’s fragile economic recovery and future prosperity.”
“President Biden, Speaker Nancy Pelosi and House Democrats are imposing billions in unnecessary spending and crippling tax hikes that will drive prices even higher, kill millions of American jobs and push them to foreigner, and usher in a new era of government dependency with the greatest expansion of the welfare state in our lifetime, ”said Rep. Kevin Brady of Texas, the committee’s senior Republican, of the plan.
But what’s not included is notable. The richest of the rich earn little on real wages (Mr Bezos’ salary as founder of Amazon was $ 81,840 in 2020), so an income surtax would have little impact. Their immense fortunes in stocks, bonds, real estate and other assets grow largely tax-sheltered every year.