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  • Business
    TheStreet.com

    Jim Cramer: If the Capital Gains Taxman Cometh, Be Ready for Anything

    Do we adjust our portfolio now that President Joe Biden is going to propose a huge increase in the capital gains tax for the wealthy? Do we avoid the asset class that had favorable tax treatment and might lose it? It's a fact of life that the capital gains cuts that President George W. Bush gave us amounted to an immense windfall for wealthy people.

  • Bitcoin drops below $50,000, dented by rising U.S. tax worries
    Business
    MarketWatch

    Bitcoin drops below $50,000, dented by rising U.S. tax worries

    Friday's losses come on the heels of a 300-point loss for the Dow industrials DJIA after a media report that President Joe Biden is weighing a plan to nearly double capital-gains tax on the wealth

  • Biden Eyeing Tax Rate as High as 43.4% in Next Economic Package
    Politics
    Bloomberg

    Biden Eyeing Tax Rate as High as 43.4% in Next Economic Package

    (Bloomberg) -- President Joe Biden will propose almost doubling the capital gains tax rate for wealthy individuals to 39.6% to help pay for a raft of social spending that addresses long-standing inequality, according to people familiar with the proposal.For those earning $1 million or more, the new top rate, coupled with an existing surtax on investment income, means that federal tax rates for wealthy investors could be as high as 43.4%. The new marginal 39.6% rate would be an increase from the current base rate of 20%, the people said on the condition of anonymity because the plan is not yet public.A 3.8% tax on investment income that funds Obamacare would be kept in place, pushing the tax rate on returns on financial assets higher than rates on some wage and salary income, they said.QuickTake: How Capital Gains Are Taxed and What Biden Might DoStocks slid the most in more than a month on the news, with the S&P 500 Index down 0.9% at the close. Ten-year Treasury yields fell to 1.54% from an intraday high of 1.59% before Bloomberg’s report.The proposal could reverse a long-standing provision of the tax code that taxes returns on investment lower than on labor. Biden campaigned on equalizing the capital gains and income tax rates for wealthy individuals, saying it’s unfair that many of them pay lower rates than middle-class workers.White House Press Secretary Jen Psaki, asked about the capital-gains plan at a press briefing Thursday, said, “we’re still finalizing what the pay-fors look like.” Biden is expected to release the proposal next week as part of the tax increases to fund social spending in the forthcoming “American Families Plan.”Other measures that the administration has discussed in recent weeks include enhancing the estate tax for the wealthy. Biden has warned that those earning over $400,000 can expect to pay more in taxes. The White House has already rolled out plans for corporate tax hikes, which go to fund the $2.25 trillion infrastructure-focused “American Jobs Plan.”Republicans have insisted on retaining the 2017 tax cuts implemented by former President Donald Trump, and argued that the current capital-gains framework encourages saving and promotes future economic growth.“It’s going to cut down on investment and cause unemployment,” Chuck Grassley of Iowa, a top Republican on the Senate Finance Committee and former chair of that panel, said of the Biden capital-gains plan. He lauded the result of the 2017 tax cuts, and said, “If it ain’t broke, don’t fix it.”GOP lawmakers on Thursday called for repurposing previously appropriated, unused pandemic-relief funds to help pay for their counteroffer infrastructure plan. The group underlined opposition to tax hikes, other than a potential revamp of the levies that go toward highway funding in a way that would cover electric vehicles.Earlier: GOP Counters Biden With $568 Billion Infrastructure PlanBiden will detail the American Families Plan in a joint address to Congress on April 28. It is set to include a wave of new spending on children and education, including a temporary extension of an expanded child tax credit that would give parents up to $300 a month for young children or $250 for those six and older.Biden’s proposal to equalize the tax rates for wage and capital gains income for high earners would greatly curb the favorable tax treatment on so-called carried interest, which is the cut of profits on investments taken by private equity and hedge fund managers.The plan would effectively end carried interest benefits for fund managers making more than $1 million, because they wouldn’t be able to pay lower capital gains rates on their earnings. Those earning less than $1 million may be able to still claim the tax break, unless Biden repeals the tax provision entirely.The capital gains increase would raise $370 billion over a decade, according to an estimate from the Urban-Brookings Tax Policy Center based on Biden’s campaign platform.For $1 million earners in high-tax states, rates on capital gains could be above 50%. For New Yorkers, the combined state and federal capital gains rate could be as high as 52.22%. For Californians, it could be 56.7%.Democrats have said current capital gains rates largely help top earners who get their income through investments rather than in the form of wages, resulting in lower tax rates for wealthy people than those they employ.Capital gains taxes are paid when an asset is sold, and are applied to the amount of appreciation on the asset from when it was bought to when it is sold.Congressional Democrats have separately proposed a series of changes to capital-gains taxation, including imposing the levies annually instead of when they are sold.“There ought to be equal treatment for wages and wealth,” Senate Finance Committee Chairman Ron Wyden, an Oregon Democrat who’s the chamber’s top tax-writer, told reporters in a phone briefing Thursday. “On the Finance Committee we will be ready to raise whatever sums the Senate Democratic caucus thinks are necessary.”(Updates with market close in fourth paragraph, carried interest background in 12th paragraph.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.

  • Biden tax fears leave Bitcoin, Ether groggy
    Business
    Reuters

    Biden tax fears leave Bitcoin, Ether groggy

    Cryptocurrency Ether pulled back sharply from a record high and rival Bitcoin also fell on Friday amid speculation that U.S. President Joe Biden's plan to raise capital gains taxes will curb investment in digital assets. The drops came after Biden on Thursday unveiled a raft of proposed changes to the U.S. tax code, including a plan to nearly double taxes on capital gains to 39.6% for people earning more than $1 million. "That's what everyone is talking about now," Chris Weston, head of research at Pepperstone Markets Ltd, a foreign exchange broker based in Melbourne, said referring to the tax plan.