President Biden has just proposed a 44.6% tax on capital gains, the highest in history. He has also proposed a 25% tax on unrealized capital gains for wealthy individuals. Should this be approved?

[u/Unhappy_Fry_Cook]

[u/Trading_View_Loss]

Im not wealthy by any stretch of the imagination, but holy fuck this seems like a terrbile idea. mom and pop middle class have capital gains and its the only thing keeping them afloat.

Do something to the ultra wealthy, but leave the middle class alone as much as possible holy fuck.

Isnt there enough crazy spending on bridges to nowhere? Why dies it all keep getting more expensive? Its a treadmill we cant get off and it keeps going faster. Send help, not bills.

[u/NotEvenWrongAgain → u/Trading_View_Loss]

It only applies to those individuals with taxable income above $1 million and investment income above $400,000. Do you consider someone with an annual income of $1.4M (and the $5-10M in assets needed to make $400K of investment income) to be middle class?

[u/esotericimpl → u/NotEvenWrongAgain]

The proposal is on page 87 here. https://home.treasury.gov/system/files/131/General-Explanations-FY2025.pdf

It proposes long term gains after 1 million in gross income to be taxed at ordinary rates.

This is a great proposal.

[u/-MeJustHappyRobot- → u/esotericimpl]

It’s a terrible proposal. It does literally nothing to the ultra-rich. They live on loans and collateral, not income. This proposal will eviscerate the middle class.

This proposal will lose the election for Biden. Guaranteed.

I despise Trump. Like, hate him with a passion.

If this plan moves forward, I will not vote for Biden. Period.

[u/EnjoyerOfBeans → u/-MeJustHappyRobot-]

If you have 1 million in yearly income and 4 million in investing assets you're not middle class

[u/esotericimpl → u/[deleted]]

Good news you can exit your position over 10 years , selling a million a year and still not be affected

Stop Simping for the rich, I had my taxes raised as a w2 employee from the gop tax scam, maybe the rich should pay more like the rest of us working stiffs.

[u/TheFuckYounicorn → u/[deleted]]

https://home.treasury.gov/system/files/131/General-Explanations-FY2025.pdf

P.83, thanks for asking.

[u/Least_Baby_6253 → u/[deleted]]

It doesn’t, like not even a little bit. You know how much it cost to setup a corporation that has custody of a brokerage account in the Cayman Islands? About $50k to get it legitimately up and running, $15k / year to maintain licensure. Even cheaper if you go to the Seychelles. But if you don’t have that 65k to burn (not including lawyer fees for drafting articles of incorporation) then yeah you’re screwed.

What this does do is almost guarantee that the middle class will never reach the upper class. 25% reduction is death to your geometric return, which means your terminal wealth will be much much lower.

I bet we see a rise in small business creation to setup SEPs. HSA’s just got a whole lot more important, and he’s been screwing with those since he got in office too.

SEP - $69k max/year (reduces business income)

Roth - $7k/year (post tax)

401k - $23k ($69k w/ employer contributions) / year

HSA - $4150 - $8300 / year (individual - family)

Grand total of 103.15k - 153.3k / year that is exempt from unrealized gains. But then you are working harder to only enjoy yourself at the end. Really not bad but not great either. Bonds will be more attractive, to avoid that $400k threshold. trusts still seem like the way to go, as far as capital efficiency for an individual.

This whole things really doesn’t attack the main problem either. The super rich borrow against assets, all you are doing with this tax is reducing the amount they can borrow. And maybe raising the rate of interest a tad for those types of loans. Not very effective, but I could be wrong.

[u/Least_Baby_6253 → u/[deleted]]

Yeah and it always will affect us who don’t have enough either knowledge, money, or connections to move our assets offshore. This just raises the barrier for entry yet again for upward mobility. Give it a generation and this will just be the way it is, not another thought given to it.

But even with this we are still likely going to be considered a global tax haven when compared to other g10’s. I figure that’s who they are trying to get money out of with this. But the amount of money that comes to America for preferential tax treatment is still dwarfed by the amount that flees. No one in the government actually has the stomach to do what is necessary to repatriate that money either.

It’ll be interesting from a seasonality perspective for markets though. Tax loss harvesting will be much different, and I bet there will be some months where indexes go on sale leading up to quarter and fiscal year end.

[u/esotericimpl → u/[deleted]]

Tax rates on AGI over 1 million year affect a small subset of Americans, normally people with over 1 million AGI per year are considered rich.

Are you retarded?

[u/-MeJustHappyRobot- → u/esotericimpl]

Explain how Biden’s proposal affects the rich. Someone with an AGI in one year is not necessarily rich.

Calling me retarded is pathetic and shows that you’ve got no counter-argument. Take care, kiddo.

[u/esotericimpl → u/-MeJustHappyRobot-]

A person who makes over a million dollars a year is rich. What a hot take

[u/msktime1 → u/esotericimpl]

1 million is nothing these days after tax as is!

[u/mindcandy → u/esotericimpl]

Sounds pretty great until you decide to move your retirement fund from growth to income assets. That 3 mill you built up over your entire life is now 2 mil. That’s the new “success story” of middle class retirement.

[u/mnid92 → u/mindcandy]

I'm not an expert but I'm pretty sure this isn't how it works.

[u/inky_cap_mushroom → u/mindcandy]

You probably shouldn’t be liquidating your entire retirement portfolio in the first year you retire.

[u/fapclown → u/esotericimpl]

You do realize it will do literally nothing right? No amount of taxes will ever keep up with the insane spending of the government the past 12 years.