Biden's capital gains tax proposal could crush the economy, experts say

President Biden's latest proposal to hike nan apical superior gains taxation complaint to its highest level successful much than a period is facing dense disapproval from experts who pass specified an action could importantly harm nan U.S. economy.

According to a study issued by nan Treasury Department, led by Secretary Janet Yellen, nan president's projected fiscal twelvemonth 2025 fund would summation nan apical marginal complaint connected semipermanent superior gains and qualified dividends to a staggering 44.6%. A superior gains taxation hike of that magnitude would return nan complaint to its highest level since it was first introduced successful nan early 1920s.

"Investment is nan existent driver of economical growth," E.J. Antoni, an economist and investigation chap astatine The Heritage Foundation, told Fox News Digital. "Investment is what gives you productivity gains. Investment is wherever you get factories and machines — it's wherever businesses are capable to supply their workers pinch devices and instrumentality that let them to summation their productivity, to summation wages, etc."

"If you're going to taxation something, you get little of it," he continued. "And that's conscionable arsenic existent for finance arsenic it is for thing else. Taxing superior gains intends little investment, it intends little economical growth, and it intends nan emergence successful people's standards of surviving is going to slow dramatically."

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According to nan Treasury Department, President Biden's connection would hike nan apical taxation complaint to a staggering 44.6%, perchance stifling early investment. (Chip Somodevilla/Getty Images | Alex Wong/Getty Images)

The Treasury Department's study states that nan 44.6% complaint is simply a operation of proposals, including expanding nan top mean superior gains rate from 20% to 37%. The bulk of nan taxation hikes effect Americans pinch taxable income greater than $1 million.

But Antoni, who based on specified a taxation hike would person wide economical impacts, further noted that ostentation impacts nan value of equities, specified arsenic stocks. That intends a taxation connected gains erstwhile equities are sold besides taxes inflation.

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Increasing superior gains taxes, therefore, could create a larger inducement for lawmakers and national policymakers to support precocious rates of ostentation to guarantee larger taxation revenues, according to Antoni.

"These are nan really vulnerable Biden proposals that a batch of group miss erstwhile it's rolled retired from Treasury," Mike Palicz, head of national taxation argumentation astatine Americans for Tax Reform, told Fox News Digital. "They really travel retired and say, 'we're advocating for a apical superior gains complaint of 44.6%.'"

Treasury Secretary Janet Yellen speaks during a property convention successful Mexico City connected Dec. 6, 2023. (RODRIGO OROPEZA/AFP via Getty Images)

"This is people's nest egg. This is them saving, them investing — it's their American dream. And present is Biden coming retired pinch nan highest projected superior gains taxation successful 100 years," Palicz said. 

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In a caller post, Americans for Tax Reform stated that nan taxation connection outlined by nan Treasury Department, when paired pinch precocious authorities taxes, could lead to galore Americans paying rates of much than 50% connected income. The group besides noted nan connection could crush mini business owners who will beryllium exposed to nan precocious complaint erstwhile they activity to waste their businesses.

Biden's connection would further create a mandatory superior gains taxation connected transferred assets for families erstwhile parents walk away.

Signage extracurricular nan Internal Revenue Service office is pictured successful Washington, D.C. (Samuel Corum/Bloomberg via Getty Images)

Additionally, Biden's connection would enforce a 25% taxation connected unrealized superior gains owned by Americans whose wealthiness exceeds $100 million. Overall, that caller tax, on pinch nan important superior gains taxation increase, are projected to lead to astir $800 cardinal successful new authorities revenue, according to a Peter G. Peterson Foundation analysis.

"The thought that this is someway going to raise trillions upon trillions of dollars is erstwhile again based connected nan conception that group will respond by fundamentally not responding," Antoni said. "In different words, I won't really alteration my behaviour erstwhile faced pinch these higher taxation rates."

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The Treasury Department didn't respond to a petition for comment.