Investment taxed at 86% — Biden’s tax plan would kill Wall Street

[Kamaji]

Investment taxed at 86% — Biden’s tax plan would kill Wall Street

By Stephen Moore
April 17, 2023

President Joe Biden has been touting his “Invest in America” theme across the country.

He’s right that investment in factories, pipelines, research and development, business startups and technology is the seed corn for a growing economy.

Investment is critical to future prosperity and raises American workers’ wages.

The private sector accounts for about 80% of all investment in America, and each year private investors put about $4.5 trillion at risk to advance new companies and technologies.

So if it’s investment Biden wants, why does his new tax plan call for what might be the largest tax penalty on investment in American history?

If you don’t believe me, let’s walk through the math; the nonpartisan Tax Foundation has verified these numbers.

Let’s say you’re a multimillionaire who decides to invest $1 million in a startup biomedical-research corporation that has a promising treatment for Parkinson’s.

Remember, this is at-risk capital. An investor is more likely to lose the $1 million than to score the hoped-for big return.

But let’s assume you pick a winner and over 10 years have made $1 million in paper profits.

The first thing that happens, before you see any profits, is the firm pays a corporate tax on them.

Biden wants to raise that to 28% after all allowable expenses. The company pays $280,000 to the feds, and that $1 million in profits shrinks to $720,000.

Now let’s say you sell the stock. Biden wants to raise the capital-gains tax to roughly 44.6% for millionaires from 23.8% today.

*  *  *

Adding up the corporate tax and the capital-gains tax on the $1 million profit, your effective tax owed is just a shade over $600,000, or a 60% tax rate.

The tax is roughly similar if you take your profits through dividends or if you hold on to the stock — because Biden wants to tax gains on stock whether you have sold it or not.

But wait. That isn’t really the total tax because, remember, capital gains are not indexed for inflation.

*  *  *

Source:  https://nypost.com/2023/04/17/investment-taxed-at-86-bidens-tax-plan-would-kill-wall-street/

[DefiantMassRINO]

Taxing unrealized gains means everyone's 401-K / Retirement IRA is a potential target.

The Dems are coming to tax previouslly tax-deferred retirement savings plans.

In the 1986, when the tax deduction for IRA contributions was elminated, the 1987 stock market crash and savings & loan crisis followed.

Government and Wall Street can't stand to see a pile of private savings that isn't in their grubby kleptocratic hands.  It's easier to confiscate wealth from working people because they can't afford lawyers and lobbyists.

[Kamaji]

Taxing unrealized gains means everyone's 401-K / Retirement IRA is a potential target.

The Dems are coming to tax previouslly tax-deferred retirement savings plans.

In the 1986, when the tax deduction for IRA contributions was elminated, the 1987 stock market crash and savings & loan crisis followed.

Government and Wall Street can't stand to see a pile of private savings that isn't in their grubby kleptocratic hands.  It's easier to confiscate wealth from working people because they can't afford lawyers and lobbyists.

Not under current law.  401(k) plans are excluded from current taxation whether they have unrealized gains or realized gains (i.e., recognized income), because that is how the provisions apply, and individuals are only subject to tax on distributions.  A tax on unrealized gains, without more, would not alter that treatment.

A bigger threat to 401(k)s is the risk that a democrat government will seize them, and replace them with a notional extra claim on social security, a claim that would most likely end up being more illusory than not.

[catfish1957]

Did anyone else notice that in addition to this capitalism killing incremental wealth tax, there will be no talk of repeal of capital gains?.

So theoretically you could be double taxed on the same sale of the same asset......   Insane. Think I'll invest in mattresses, safes, and shovels.

[catfish1957]

And just wait until something like this even becomes rumour of being enacted

There will be a '29 like run on the market.  I know I'll totally cash in....   Captial and massive distributon gains. be damned.

[DefiantMassRINO]

@Kamaji

Laws can be changed ... especially in the middle of the night on a holiday as part of an "emergency" bill.

Wall Street and DC kleptocrats want ALL the money for themselves.

Not under current law.  401(k) plans are excluded from current taxation whether they have unrealized gains or realized gains (i.e., recognized income), because that is how the provisions apply, and individuals are only subject to tax on distributions.  A tax on unrealized gains, without more, would not alter that treatment.

A bigger threat to 401(k)s is the risk that a democrat government will seize them, and replace them with a notional extra claim on social security, a claim that would most likely end up being more illusory than not.

[Kamaji]

And just wait until something like this even becomes rumour of being enacted

There will be a '29 like run on the market.  I know I'll totally cash in....   Captial and massive distributon gains. be damned.

There'd be a big boost in expatriations as well.