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

[Valletta]

"This is people's nest egg. This is them saving, them investing — it's their American dream. And here is Biden coming out with the highest proposed capital gains tax in 100 years," Palicz said.

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

President Biden is under fire in response to his effort to hike the top capital gains tax rate to its highest-ever level, a move experts say would crush the economy.

www.yahoo.com

Look, the EVs, charging stations, etc. are not free. And someone has to pay for a $10,000 debit card, smartphone, healthcare, and a fancy hotel for the immigrants. Just take it out of your grocery bill that must be coming down--don't you listen to the White House? Welcome to Bidenomics.

 

[Desk trauma]

Yes, the poor persecuted multimillionaires. How shall they scrape by?

 

[Bradskii]

"This is people's nest egg. This is them saving, them investing — it's their American dream. And here is Biden coming out with the highest proposed capital gains tax in 100 years," Palicz said.

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

President Biden is under fire in response to his effort to hike the top capital gains tax rate to its highest-ever level, a move experts say would crush the economy.

www.yahoo.com

Look, the EVs, charging stations, etc. are not free. And someone has to pay for a $10,000 debit card, smartphone, healthcare, and a fancy hotel for the immigrants. Just take it out of your grocery bill that must be coming down--don't you listen to the White House? Welcome to Bidenomics.

From the article:

'Investment is the real driver of economic growth," E.J. Antoni, an economist and research fellow at The Heritage Foundation, told Fox News Digital. "Investment is what gives you productivity gains. Investment is where you get factories and machines — it's where businesses are able to provide their workers with tools and equipment that allow them to increase their productivity, to increase wages, etc."

Good point. How can we solve this. If money is taken out of the hands of rich industrialists then there's less money for investment in the industry and less productivity. Hmm.

Hey, I know. Factory owners can invest their profits in tools and equipment and they won't have to pay tax on it. And the man on the shop floor gets better working conditions, the factory gains more productivity, the owners make more profit and everyone gets higher wages. A win/win situation!

Well done The Heritage Foundation for pointing that out.

 

[iluvatar5150]

"This is people's nest egg. This is them saving, them investing — it's their American dream. And here is Biden coming out with the highest proposed capital gains tax in 100 years," Palicz said.

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

President Biden is under fire in response to his effort to hike the top capital gains tax rate to its highest-ever level, a move experts say would crush the economy.

www.yahoo.com

Look, the EVs, charging stations, etc. are not free. And someone has to pay for a $10,000 debit card, smartphone, healthcare, and a fancy hotel for the immigrants. Just take it out of your grocery bill that must be coming down--don't you listen to the White House? Welcome to Bidenomics.

There's so much nonsense in this piece, Fox must think their readers are grossly ignorant.

"Investment is the real driver of economic growth," E.J. Antoni, an economist and research fellow at The Heritage Foundation, told Fox News Digital. "Investment is what gives you productivity gains. Investment is where you get factories and machines — it's where businesses are able to provide their workers with tools and equipment that allow them to increase their productivity, to increase wages, etc."

Those investments are considered business expenses that get deducted from profits. Some you take immediately; some you depreciate over time. But you don't pay taxes on them.

"If you're going to tax something, you get less of it," he continued. "And that's just as true for investment as it is for anything else. Taxing capital gains means less investment, it means less economic growth, and it means the rise in people's standards of living is going to slow dramatically."

How exactly does this work? When you get less of something by taxing it, what happens is that the money that would go towards the taxed item goes towards something else. But how does that work on income. When you tax income (of any sort), do people work less? If anything, this should spur more investment, because that's what it would take to maintain the same level of income.

And whose standard of living growth would slow dramatically? Biden's proposed increases only impact the marginal tax rate above $1 million.

Increasing capital gains taxes, therefore, could create a larger incentive for lawmakers and federal policymakers to maintain high rates of inflation to guarantee larger tax revenues, according to Antoni.

What? High taxes are deflationary. Again, the capital gains increase is above $1 million.

The group also noted the proposal could crush small business owners who will be exposed to the high rate when they seek to sell their businesses.

Yes, people getting multi-million dollar payouts would be "crushed" by taxes.

Biden's proposal would further create a mandatory capital gains tax on transferred assets for families when parents pass away.

Good. There's no reason for the cost basis to step up when somebody inherits the asset.

 

[Pommer]

From the article:

'Investment is the real driver of economic growth," E.J. Antoni, an economist and research fellow at The Heritage Foundation, told Fox News Digital. "Investment is what gives you productivity gains. Investment is where you get factories and machines — it's where businesses are able to provide their workers with tools and equipment that allow them to increase their productivity, to increase wages, etc."

Good point. How can we solve this. If money is taken out of the hands of rich industrialists then there's less money for investment in the industry and less productivity. Hmm.

Hey, I know. Factory owners can invest their profits in tools and equipment and they won't have to pay tax on it. And the man on the shop floor gets better working conditions, the factory gains more productivity, the owners make more profit and everyone gets higher wages. A win/win situation!

Well done The Heritage Foundation for pointing that out.

The whole problem of “needing money to make money” can end up in having an economy that makes nothing but money. Running such a “machine” will eventually make whatever money there is, worthless.
TETL

 

[o_mlly]

Those investments are considered business expenses that get deducted from profits. Some you take immediately; some you depreciate over time. But you don't pay taxes on them.

? You miss the point entirely. Those investments just never happen if the monies are taxed away.

When you tax income (of any sort), do people work less? If anything, this should spur more investment, because that's what it would take to maintain the same level of income.

Wow. Spur more investment? How does one invest more of that which they now have less of?

High taxes are deflationary.

? Just how do you imagine that works out? If the government spends the taxed money (which they have shown a strong propensity to do) how exactly does that affect price levels?

Yes, people getting multi-million dollar payouts would be "crushed" by taxes.

Oh dear. Small business owners who sell do not get "multi-million" dollar payouts. They only get what a willing buyer will pay. And, whatever that amount is will be taxed as a capital gain at the higher rates under the Biden scheme.

There's no reason for the cost basis to step up when somebody inherits the asset.

? Is there buried in Biden's plan a mandated accounting change as well that's not mentioned in the article?

 

[Hans Blaster]

? You miss the point entirely. Those investments just never happen if the monies are taxed away.

Most "capital gains" taxes are applied to transactions that are just selling higher something you bought previously. (How I managed to get some last year.) Those are not the kind of "investments" in your little formula. Many real investments in the economy (the kind covered by your formula) like building a new factory, or starting a new company often have tax incentives for those making the investment.

 

[Belk]

There's so much nonsense in this piece, Fox must think their readers are grossly ignorant.

STUDY: Watching Only Fox News Makes You Less Informed Than Watching No News At All

www.businessinsider.com

 

[durangodawood]

Whats the basic principle for taxing capital gains less than wage income?

 

[o_mlly]

Most "capital gains" taxes are applied to transactions that are just selling higher something you bought previously. (How I managed to get some last year.) Those are not the kind of "investments" in your little formula. Many real investments in the economy (the kind covered by your formula) like building a new factory, or starting a new company often have tax incentives for those making the investment.

Nope. The Biden tax rate hikes would apply only to long-term capital gains; assets sold at a price greater than the price at which the asset was bought and held for 1 year more. Asset sold in less than 1 year at a price greater than the price bought are taxed as ordinary income.

What exactly is an "unreal" investment? And what little formula are you referring to?

Tax incentives? Do you mean shifting the tax burden from the wealthy to the working man so the wealthy can buy those electric cars? You know that unless those cars are used in business, they are not depreciable. BTW, you can pick up one from Hertz. They will not likely owe any capital gains tax on the transaction.

 

[iluvatar5150]

? You miss the point entirely. Those investments just never happen if the monies are taxed away.

Investments into "factories and machines" aren't taxed, period.

Wow. Spur more investment? How does one invest more of that which they now have less of?

Those investments are deductible.

? Just how do you imagine that works out?

Really? All your puffery about business and you don't know that taxes are deflationary? They're deflationary because they remove money from the economy.

If the government spends the taxed money (which they have shown a strong propensity to do) how exactly does that affect price levels?

That would be spending, not taxation. Government spending is inflationary.

Oh dear. Small business owners who sell do not get "multi-million" dollar payouts. They only get what a willing buyer will pay. And, whatever that amount is will be taxed as a capital gain at the higher rates under the Biden scheme.

Oh dear. The Biden plan only institutes these rates above $1 million in income.

? Is there buried in Biden's plan a mandated accounting change as well that's not mentioned in the article?

It's mentioned, albeit briefly. Unrealized gains that are transferred upon death will be subject to capital gains tax above a $5m exemption. AFAIK, that's not a change in the costs basis, but it's better than nothing.

 

[o_mlly]

Investments into "factories and machines" aren't taxed, period.

Those investments are deductible.

Still missing the author's point. One cannot invest monies they do not have.

Really? All your puffery about business and you don't know that taxes are deflationary? They're deflationary because they remove money from the economy.

Oh dear. If seem some posters in this thread need some more of my "puffery".

I do know, and apparently you do not, that taxes are not deflationary. Taxes do not remove money from the economy; they serve only to move money to the government. Only the Fed's monetary policy can effect changes in the money supply.

Gosh, not much point in continuing.

 

[iluvatar5150]

Still missing the author's point. One cannot invest monies they do not have.

Business taxes are levied on profits, which are calculated after the expenses are already incurred.

I do know, and apparently you do not, that taxes are not deflationary. Taxes do not remove money from the economy; they serve only to move money to the government.

Taxes don't remove money from the economy, but they do reduce aggregate demand by reducing the capacity of people to buy stuff.

Only the Fed's monetary policy can effect changes in the money supply.

Oh wait, are you one of those guys that thinks inflation is a measure of the money supply and not a measure of prices?

 

[Hans Blaster]

Whats the basic principle for taxing capital gains less than wage income?

Rich people have better lobbyists.

 

[Hans Blaster]

Nope. The Biden tax rate hikes would apply only to long-term capital gains; assets sold at a price greater than the price at which the asset was bought and held for 1 year more. Asset sold in less than 1 year at a price greater than the price bought are taxed as ordinary income.

The duration of the hold is irrelevant to the non-creation of new assets form of "investing". My CGs were almost all from long term holds. I didn't create any new industry or product, I just bought some mutual funds that invested in some stocks that already existed. (aka, by low, sell higher, one second or one year hold time makes no difference)

What exactly is an "unreal" investment?

I didn't say anything about "unreal" anything.

And what little formula are you referring to?

It must have been from a different thread. I might have been a different poster as well. (All of you colored circle people look the same to me.)

Tax incentives? Do you mean shifting the tax burden from the wealthy to the working man so the wealthy can buy those electric cars?

Personal electric cars aren't an investment either. I'm talking about all of those subsidies and tax incentives given out for opening a new factory, etc. You know actual investments in the economy.

You know that unless those cars are used in business, they are not depreciable. BTW, you can pick up one from Hertz. They will not likely owe any capital gains tax on the transaction.

What? I think you got lost on a tangent. I thought I was pretty clear I was talking about business investments (starting/expanding/etc.).

Biden's proposal largely hits stock speculators (including buy, hold and sell speculators) not the kind of investments that grow the economy.

 

[o_mlly]

Business taxes are levied on profits, which are calculated after the expenses are already incurred.

The topic is capital gains tax which affects more than just businesses.

Now to the point at issue. Monies for investment are income after taxes. Biden's changes will increase taxes. Less monies will be available for private investments.

Taxes don't remove money from the economy ...

You're welcome.

... but they do reduce aggregate demand by reducing the capacity of people to buy stuff.

And increase the capacity for government to buy stuff. Same effects on inflation unless, as already pointed out as improbable, government shows some fiscal discipline in managing the debt.

The "stuff" that people can no longer buy are the goods and services that used to be provided by the people who have lost their jobs. That's not a good thing.

Oh wait, are you one of those guys that thinks inflation is a measure of the money supply and not a measure of prices?

Really? Now that you've been called out on your lack of business acumen you invent strawmen.

 

[o_mlly]

The duration of the hold is irrelevant to the non-creation of new assets form of "investing". My CGs were almost all from long term holds. I didn't create any new industry or product, I just bought some mutual funds that invested in some stocks that already existed. (aka, by low, sell higher, one second or one year hold time makes no difference)

? The topic is capital gains tax changes. Time the asset is held does make a difference in the tax rates applied to the gains experienced.

Companies finance their new investments in three different methods: using retained earnings, issuing bonds, or issuing stock. The monies you invested in equity mutual funds that acquire stocks help drive the prices of the stocks purchased up motivating the underlying company to finance new investments through new stock offerings.

I didn't say anything about "unreal" anything.

You wrote, "... many real investments ..." So what are "unreal" investments?

It must have been from a different thread. I might have been a different poster as well. (All of you colored circle people look the same to me.)

Obviously, you are quite confused. Good that you've taken the first step: acknowledging your confusion.

I'm talking about all of those subsidies and tax incentives given out for opening a new factory, etc. You know actual investments in the economy.

You're still very confused. Biden's capital gains tax changes do not include subsidies or incentives for new investment. Rather they disincentive new investment. And no, I do not know what you mean by "actual investments". What exactly are "unactual investments"?

I thought I was pretty clear I was talking about business investments (starting/expanding/etc.).

You already admitted being confused in the thread. And it continues.

Monies available for business investment = earnings after TAXES. Ceteris paribus, increases in business taxes reduces monies for business investment,

Biden's proposal largely hits stock speculators (including buy, hold and sell speculators) not the kind of investments that grow the economy.

? Nonsense.

 

[Hans Blaster]

? The topic is capital gains tax changes. Time the asset is held does make a difference in the tax rates applied to the gains experienced.

And I have only discussed assets and transactions subject to capital gains taxes, nothing else. Some of the investment you think is suppressed by those taxes aren't.

Companies finance their new investments in three different methods: using retained earnings, issuing bonds, or issuing stock.

Yep. I knew that yesterday (and 30 years ago).

The monies you invested in equity mutual funds that acquire stocks help drive the prices of the stocks purchased up motivating the underlying company to finance new investments through new stock offerings.

So tertiary affects. That's the why we need to keep taxes on stock capital gains low is so that the market for IPOs is super robust? Balderdash. Yes IPOs do inject new cash into a company, but at the same time the early investors use the IPO to cash out to a big payday. They got their money and a big return (probably). Is that all just going to stop if they had to pay a bit more cap gains tax on it? (I doubt it, or maybe it would be slightly better as they'd be a bit more cautious in their investments and we wouldn't get so many garbage fad bubble companies (see recently "crypto" and "AI") funded by them.

You wrote, "... many real investments ..." So what are "unreal" investments?

"real investments" were the kind of economic investments that you claimed this tax change would impact. The kind that grow the economy and create jobs. The primary impact of (and losers to and) increased cap gains taxes are those who gain most of their income from (long term) stock speculation. While purchase of existing corporate securities is called "investing" by investment managers, it does not grow the economy.

Obviously, you are quite confused. Good that you've taken the first step: acknowledging your confusion.

You're still very confused. Biden's capital gains tax changes do not include subsidies or incentives for new investment. Rather they disincentive new investment.

I didn't claim that they were subsidies. I said that economic investments (expanding commercial capacity) are often subsidized. Purchasing 100 shares of APPL or DJT doesn't grow the economy and other than your potential windfall from such a purchase, the only ones that benefit are stockbrokers.

And no, I do not know what you mean by "actual investments". What exactly are "unactual investments"?

I just explained it again. I don't need to one more time.

You already admitted being confused in the thread. And it continues.

Monies available for business investment = earnings after TAXES. Ceteris paribus, increases in business taxes reduces monies for business investment,

This proposal doesn't tax businesses, it taxes those who own and sell shares of those businesses. When companies spend their own cash on expansion (aka, investment) that reduces their profits and *lowers* their taxes as other posters have already noted.

? Nonsense.

I'm not sure you know what nonsense is.

 

[iluvatar5150]

And increase the capacity for government to buy stuff. Same effects on inflation unless, as already pointed out as improbable, government shows some fiscal discipline in managing the debt.

Spending is still a separate variable in the equation. On their own, taxes are deflationary.

The "stuff" that people can no longer buy are the goods and services that used to be provided by the people who have lost their jobs. That's not a good thing.

I didn’t say it was a good thing or a bad thing. I said it was deflationary, which it is.

Really? Now that you've been called out on your lack of business acumen you invent strawmen.

I didn’t invent anything. What I described was a real belief held by, IIRC, some folks in the libertarian/Austrian camp. I was asking if you subscribed to that belief.

 

[o_mlly]

And I have only discussed assets and transactions subject to capital gains taxes, nothing else. Some of the investment you think is suppressed by those taxes aren't.

You wrote, "The duration of the hold is irrelevant ..." As it relates to the capital gains (the OP), you are wrong.

Yes IPOs do inject new cash into a company, but at the same time the early investors use the IPO to cash out to a big payday. They got their money and a big return (probably). Is that all just going to stop if they had to pay a bit more cap gains tax on it?

A bit more? From 20% to 39.6% and higher depending on what state one resides. That's a 98% increase.

"real investments" were the kind of economic investments that you claimed this tax change would impact. The kind that grow the economy and create jobs.

Yes. Increasing the capital gains tax on high earners will cause those investors to move capital from the U.S. to countries with lower rates. Result, lower GDP, job losses, lower wages.

I didn't claim that they were subsidies.

You wrote, "I'm talking about all of those subsidies and tax incentives given out for opening a new factory, etc."

I said that economic investments (expanding commercial capacity) are often subsidized.

So, you think the politicians are better at picking winners and losers (using other people's money) than individuals (using their own money). Nope. Solyndra – $570 million taxpayer dollars wasted; Abound Solar – $401 million taxpayer dollars wasted; Calisolar – $280 million taxpayer dollars wasted; Fisker Automotive – $193 million taxpayer dollars wasted, etc.

This proposal doesn't tax businesses, it taxes those who own and sell shares of those businesses. When companies spend their own cash on expansion (aka, investment) that reduces their profits and *lowers* their taxes as other posters have already noted.

I'm not sure you know what nonsense is.

Yes. The quote above this one is nonsense.

When new investments are financed with retained earnings (a balance sheet entry) it has no effect on the company's profit or loss (the income statement).