Proposed Biden Tax Increases

Biden’s handlers have proposed increased tax rates across the board starting in fiscal year 2025. As I write this, markets are tanking. Markets will discount this economy-sapping proposal until it gets rolled back or another electable candidate counters it. 

In a sane world, no presidential candidate could get elected running a campaign on these economy-killing, fiscal insanity proposals. But as the response to the fake Covid pandemic rolled out on the entire world illustrated, we no longer live in a sane world.

When you tax something, you get less of it. The Laffer Curve shows that tax revenues decline above or below an optimum tax rate. In a representative democracy, the electorate chooses representatives who best promote economic growth–among all the other competing political issues. It is a legitimate question whether we still have a representative democracy. Economic growth is optimum with stable money and low tax rates, and any candidate who promotes that policy should rise to the top of electability. Yet, Biden’s handlers are running him for reelection on these proposals. It’s as if he doesn’t have to worry about the will of the electorate.

The lowest tax rate should be a 0% capital gains rate. Capital is the surplus of time, energy, and talent. When capital is punished at any rate above zero, the funding of entrepreneurial risk becomes disincentivized. All growth comes from risk. Jude Wanniski summarized why zero is the best rate for capital gains

Instead, the Biden handler’s proposal seeks to raise the capital gains tax to 44.6% at the top marginal rate.

A separate proposal would first raise the top ordinary rate to 39.6 percent (43.4 percent including the net investment income tax). An additional proposal would increase the net investment income tax rate by 1.2 percentage points above $400,000, bringing the marginal net investment income tax rate to 5 percent for investment income above the $400,000 threshold. Together, the proposals would increase the top marginal rate on long-term capital gains and qualified dividends to 44.6 percent.

 The proposal has tax rate hikes across the board.

The proposal would increase the tax rate for C corporations from 21 percent to 28 percent. The effective global intangible low-taxed income (GILTI) rate would increase to 14 percent under the proposal.

Top marginal income tax rate

The proposal would increase the top marginal tax rate to 39.6 percent. The top marginal tax rate would apply to taxable income over $450,000 for married individuals filing a joint return and surviving spouses, $400,000 for unmarried individuals (other than surviving spouses and head of household filers), $425,000 for head of household filers, and $225,000 for married individuals filing a separate return.

Increased tax on Medicare

An additional 0.9 percent Medicare tax is imposed on self-employment earnings and wages of high-income taxpayers, above the same NIIT thresholds of $200,000 for single and head of household filers and $250,000 for joint filers, thus bringing the combined rate of Medicare tax to 3.8 percent for these taxpayers.

The details of the proposal are here.

While the equity markets tank on Biden’s proposed tax increases, gold is up. See The Repo Act, Gold, and Dollar Demand. Secretary Yellen, who previously stated that seizing and repurposing Russian assets was illegal, now says,

It is necessary and urgent for our international coalition to unlock the value of immobilized Russian sovereign assets,” Treasury Secretary Janet Yellen said in a statement. “Congress took an important step in that effort with the passage of the REPO Act, and I will continue intensive discussions with our G-7 partners in the weeks ahead on a collective path forward.” 

Two weeks ago, Yellen threatened to sanction Chinese banks that support Russia during the Ukraine war. Markets are discounting these threats to global stability and economic growth.


  1. Michael Kendall (Post author)

    In my quick perusal yesterday of the Biden handler’s tax proposal, I neglected to mention the worst aspect of the entire proposal. It imposes a 25% tax on unrealized capital gains.

    “The proposal would impose a minimum tax of 25 percent on total income, generally inclusive of unrealized capital gains, for all taxpayers with wealth (that is, the difference obtained by subtracting liabilities from assets) greater than $100 million.”

    A confiscatory 44.6% capital gains tax on wealth creation and risk is economy killing enough, but this proposal wants to drive a stake through the heart of growth with an added tax on the illusion of wealth creation and risk.

    A long series of economy killing tax increases and socialist fiscal policy turned the 1929 Smoot Hawley DOW crash into the Great Depression. This proposal seeks to reenact the economic policy blunders that caused the Great Depression.

    The markets can discount that this proposal has little chance of enactment, but to the extent it advances, what remains of economic growth is at peril.

  2. John Hoben

    Godspeed, Mike – love your wisdom.


Leave a Comment

Your email address will not be published. Required fields are marked *