President Joe Biden’s proposed budget for the upcoming fiscal year assumes that a hike in the capital-gains tax rate took effect in late April, meaning that it already would be too late for high-income investors to realize gains at lower tax rates, according to a Wall Street Journal report out Thursday citing people familiar with the proposal.
Biden plans to increase the top tax rate on capital gains to 43.4% from 23.8% for households with income over $1 million, though Congress must OK any hikes and retroactive effective dates, the report added.
Some analysts predicted any rise in capital-gains taxes will not end up being retroactive.
“Given that Biden’s capital-gains tax proposals face headwinds already, we think it is unlikely that Congress will make them retroactive as well. That would be adding insult to injury,” said James Lucier, managing director at Capital Alpha Partners, in a note.
Separately, a New York Times report said Biden plans to propose a $6 trillion budget on Friday that would take the U.S. to its highest sustained levels of federal spending since World War II.
Documents obtained by the Times show that Biden’s first budget request as president calls for total spending to rise to $8.2 trillion by 2031 as he aims to upgrade the nation’s infrastructure and substantially expand the social safety net, that newspaper’s report added.
closed mostly higher Thursday as investors sifted through data showing another fall in weekly applications for jobless benefits as well as an updated look at first-quarter gross domestic product.
This is an updated version of a report first published on May 27, 2021.