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Proposed by Joe Biden the capital gains tax rate is almost double in fact, the wealthiest Americans have caused a chorus of disapproval from major investors, underscoring the likely intense opposition from the U.S. president as he tries to move his plan forward in Congress.
“It’s insane,” said Scott Minerd, who oversees $ 310 billion in assets for Guggenheim Partners, a major investment firm.
“That’s not because I’m a capitalist on Wall Street,” he said. “Fees proposed by the current president’s administration. . . it would probably reduce tax revenues over time and encourage people to focus their money on long-term investments. ”
“This doesn’t feel like money,” said Anthony Scaramucci, founder of SkyBridge Capital’s hedge fund, who briefly worked on Donald Trump’s White House. “Doubling the rate of capital gains would have detrimental effects on job creation for middle-class workers and on wage growth.”
Biden proposes tax increases to pay extra expenses for child care and education. The plan calls for raising the highest income tax rate and applying ordinary income tax rates to capital gains for America that earn more than $ 1ma a year.
Along with the investment income tax introduced at the time of Barack Obama’s health care reform, this would bring the tax on the wealthiest American capital to 43.4%.
Financial losers may include private equity management and technology investors, whose profits include a portion of the profits of funds they manage for outside investors. These “interest-bearing” payments are taxed at a lower rate of capital gain than as income – and if Biden’s plans are successful, that difference could disappear.
The protests echoed from Wall Street to Silicon Valley as financial lobbyists were willing to influence the law.
The proposals could “kill the golden goose that is America,” wrote Tim Draper, one of Silicon Valley’s most well-known capitalist dangers.
As another major technology investor agrees, “the model focuses on consumption rather than investment. [that] it’s bad for the economy [in the] in the long run, as they are directed to the consumption of the rich [rather] rather than investing or saving for the future “.
Michael Sonnenfeldt, president of Tiger 21, has more than 850 members with a “peer-to-peer network” and is focused on preserving wealth.
Doubling the capital gains tax would mean “slapping in the face of entrepreneurs who take the risk of creating businesses,” Sonnenfeldt said, believing it would be a better carbon tax. “There is no guarantee that doubling capital gains tax will double revenue. People will find ways to avoid capital gains. “
Biden and many Democrats they believe that rounds of successive tax cuts have overshadowed the U.S. tax code too much for the wealthy and that the scarcity of revenue has led to underfunding of critical public services.
Moreover, the economic structure of America should be turned to the benefit of the workers instead of the owners of capital – they see it as an important factor in income inequality and exclusion from the middle class.
Even before he became president of Biden, Washington occasionally levied a higher tax on capital gains between private capital and hedge fund managers. The measure was largely pushed by Democrats, but occasionally by Republicans.
Still, some financiers questioned whether the proposal to eliminate the treatment in favor of capital gains would gain attention. Although many Democrats appear with additional tax increases on individuals and corporations, some may revise the root branch of the structure of the tax system.
Markets collapsed reports of proposals to allow wealthy shareholders to dispose of their shares while blocking lower taxes on capital gains.
“That’s an amazing output,” said Brad Dillon, chief wealth strategist at UBS Global Wealth Management, according to the Capital Gains Tax.
But he suggested not having the support of key Democrats, as their support could be key to getting a plan in the Senate. “It simply came to our notice then [West Virginia senator] Joe Manchin thinks that, what Kyrsten Cinema says [of Arizona] think about it, ”Dillon said.
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