Another lengthy wail-fest from Jay Weber over Biden's capgains tax proposal.
Here's commentary from a Libertarian-oriented (and relatively wealthy) investor.
...Let's get down to brass tacks on what this proposal really is: It is the elimination of the "capital gains" rate for high-earning people entirely; Obamacare already added the Medicare tax back on capital gains (unearned income) at a relatively-higher income level, so that's not a new tax.
Reality is that nobody who will get hit "as proposed" (on incomes over $1m) is "middle class" and certainly not "poor", no matter where you live. $1m, even in the highest cost areas, is a very nice income indeed and only a couple percent of people get there.
This would essentially treat all such income as ordinary income, thus be subject to the same tax rate as ordinary income. Note that for ordinary income there is no cap for Medicare either; you pay both halves, whether you do so directly if self-employed or via the split if on a W2, so it's not a higher rate than ordinary income -- it is the same rate.
Why do I call this "accidentally smart"?
Because I'm sure that Biden did not do this intentionally. But by doing it he is removing one of the perversities that has been abused for the last 20 years; specifically, "executive compensation" (which is pay for a job, folks) that has been avoided from W2 income.
This should have never been possible but of course when lobbyists write the tax code...
So let's say you're a director or officer of some company. You've been progressively ripping off the shareholders for years, with the company buying back stock and giving it to you either via restricted stock or options. This used to be illegal before the SEC changed the rules around 1990 and it never should have been made legal, as I've pointed out, because it is inevitably robbery from the shareholders of their ownership for the benefit of the officers and directors.
What's worse is that these people then turn around and exploit the tax code since they had the stock for more than a year and only pay 20% tax on the gains instead of their full marginal tax rate (which is usually the highest, as most or all of them are in the top bracket.) But the grant was in fact payment in exchange for services rendered.
Yeah, I get the argument about "well, it appreciated after the grant date." So what? It was still payment for services rendered and if I got an escalating pay-out for wages that were delivered to me at some future date since as a person I am on cash basis accounting with the IRS I would get that on a W2 on the date it was delivered in cash to me and have to pay my full marginal tax rate on it....
The whining is loud, of course; it's very, very, very well-financed.
As to the "spend" part of Biden's* proposal--his move to send more $$ to families with children is good. Incentives will give the USA more children which it sorely needs. So in principle, I'm with Biden* on this.
As to the details of how that money is distributed: nope. The objective SHOULD be to keep Moms at home with their kids, not to ship the kids to "day care." Jamming the money through school districts is equally wrong.