House Democrats are plotting to raise the capital gains rate as one of several mechanisms to raise trillions of dollars for their new spending package.
The current proposal is that the capital gains rate for high-income individuals be increased from 20% to 25%, a number that falls short of President Joe Biden’s initial pitch to hike the rate by nearly double to 39.6%.
When factoring in an existing Obamacare surtax on investment income, people making over $1 million would pay an effective rate of 28.8%. By raising the capital gains rate, Democrats hope to raise $123 billion, according to an information sheet that leaked to the media.
The capital gains increase is more modest than initially proposed. The lower-than-expected rate is also a sign that there is concern that more centrist members of the party might be