The growing blue-collar tilt of the Trump-era GOP base makes raising taxes on capital gains even more tempting, writes CNBC's John Harwood.
John Delaney understands investing. Before entering politics, he made a fortune by founding finance companies that raised $20 billion in capital for businesses.
His idea sends Wall Street a bracing signal of what 2021 might bring. Not only do Democrats want to raise taxes on the wealthy, but an increasing number find taxes on investment profits the most appealing target. The growing blue-collar tilt of the Trump-era GOP base makes the target even more tempting. Though business-friendly GOP congressional leaders resist all tax hikes, rank-and-file Republicans back capital gains increases more than other kinds, said Democratic pollster Geoff Garin.
The 2017 tax cut signed by President Donald Trump reduced the top rate on income to 37 percent from 39.6 percent, but left the top capital gains rate unchanged; for both, the highest earners face the additional 3.8 percent tax enacted to help finance Obamacare. The estate tax remained at 40 percent, but the law reduced the number of taxable estates by doubling exempted amounts to $11 million for individuals and $22 million for married couples.
When Sen. Kamala Harris of California called for big federal investments in teacher salaries this week, she identified higher estate taxes as her financing source. When Sen. Elizabeth Warren of Massachusetts proposed expanded affordable housing and universal child care, she tapped estate taxes and a new"Ultra-Millionaire Tax."
Some Democratic economists equalization would increase the"lock-in" effects that deter asset sales. Fewer assets sold means fewer realized profits to tax.
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