Joe Biden is set to propose a capital gains tax hike for the wealthiest, reports said.
Capital gains tax is likely to rise to near 28% rather than 39.6% as Joe Biden plans, Goldman said. The bank said razor-thin majorities in the House and Senate would make a big increase difficult. Biden is set to propose major tax increases for the highest earners next week, reports said.
Congress is likely to settle on a much more modest increase in capital gains tax than President Joe Biden would like, according to analysts at Goldman Sachs, with the eventual figure likely to land at around 28%.
Biden is set to propose a sharp increase in capital gains tax to 39.6% from the current 20% level for those making more than $1 million a year, according to reports in the New York Times and Bloomberg. Capital gains tax is levied on profits from the sale of property or investments.
When combined with the 3.8% surtax on investment income, it would take the tax rate on the wealthiest investors to 43.4%. Bloomberg calculated that the capital gains tax hike would affect about 0.32% of the population.
But the eventual increase – which is in the power of Congress – is likely to be much lower, Goldman Sachs analysts led by chief economist Jan Hatzius said in a note Thursday.
“We expect Congress will pass a scaled back version of this tax increase,” they wrote.
“While it is possible that Congress might pass the proposal in its entirety, we think a moderated version is more likely in light of the razor-thin majorities in the House and Senate.”
Goldman Sachs flagged moderate Democrat senators such as Joe Manchin and Kyrsten Sinema as important players in the negotiations over tax