WASHINGTON – President Joe Biden will roll out a plan to raise taxes on the wealthiest Americans and their investments to fund about $1 trillion in childcare, universal pre-kindergarten education and paid leave for workers, sources familiar with the proposal said.
The plan, part of the White House’s push for a sweeping overhaul of the U.S. tax system to make the rich and big companies pay more, calls for increasing the top marginal income tax rate to 39.6% from 37% and nearly doubling taxes on capital gains to 39.6% for people earning more than $1 million, according to the sources this week.
That would be the highest tax rate on capital gains taxes, which are mostly paid by the top 1% of Americans, since the tax was introduced in 1913.
News of the proposal triggered sharp declines on Wall Street, with the benchmark S&P 500 index down 1% in early afternoon, its steepest drop in more than a month.
Any such hike would need to go through Congress, where Biden’s Democratic Party holds narrow majorities and is unlikely to win support from Republicans.
“If it had a chance of passing, we’d be down 2,000 points,” said Thomas Hayes, chairman and managing member at hedge fund Great Hill Capital LLC, referring to stock market indexes.
Sources said details would be released next week before Biden’s address to Congress. Tax details related to the plan, which has been in the works for months, were first reported by the New York Times on Thursday morning.
White House press secretary Jen Psaki said the president would discuss his “American Families Plan” during his speech to Congress next Wednesday, but declined to comment on any details.