| President Biden will detail his capital gains tax hike proposal on the wealthiest Americans in his speech to a joint session of Congress on April 28. It's the largest-ever increase in levies on investment gains and will be instrumental in funding the American Families Plan.
That plan is expected to include investments in child care, paid family leave and education, funded by a combination of tax increases on high-income earners. It would complement a $2.3 trillion infrastructure and jobs plan, dubbed the American Jobs Plan, that Biden proposed in March.
The proposal is part of a push by the White House for a sweeping overhaul of the U.S. tax system to make rich people and big companies pay more and help fund Biden's economic agenda.
The proposal calls for higher capital gains taxes for people with incomes of more than $1 million.
So, 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%.
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.
Of course, any such increase would need to go through Congress, where the Democratic party holds narrow majorities and is unlikely to win support from Republicans, political pundits say. Some experts also say it's unclear if the plan would have the unanimous backing of congressional Democrats.
Needless to say, there are still many unknowns, which means there shouldn't be any knee-jerk reaction from investors. In fact, about 75% of U.S. stock investors wouldn't be subject to an increase in the capital gains tax rate due to the types of accounts they own, according to a UBS study.
So sit tight. There's more to come on this and the CNBC personal finance team will be on top of the news coverage.
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