President Joe Biden’s proposed budget includes a large retroactive change to the capital-gains tax on high earners, according to news reports.
The $6 trillion budget, released on Friday, includes raising the top capital gains tax on households earning more than $1 million, from 28.8% to 43.4%, the Wall Street Journal and Forbes write.
But the budget assumes that the change took effect in late April this year, according to the publications. That means that if Congress approves the budget, it would be too late for high earners to realize those gains at the current lower rate, the Journal writes.
All previous capital gains tax increases went into effect at the time they were enacted or even in the following year, according to Forbes.
Biden’s budget proposal also changes the treatment of unrealized capital gains held until death, in a bid to discourage people from holding assets until death as a way of avoiding the higher capital gains tax, according to the Journal.
The tax provisions in the budget proposal may meet resistance among Republicans, the newspaper writes.
“I just think retroactive tax policy is terrible policy,” said Sen. John Thune R.-S.D., according to the Journal. “People have made plans and relied on current law and current policy and you can’t change the rules in the middle of the game.”
And several Democratic lawmakers are likewise against Biden’s tax changes, according to the Journal and Forbes.
Sen. Mark Warner D-Va., for example, has said he favors keeping a lower tax rate for capital gains than for ordinary income, while Democratic Senators from farm states Montana and Iowa are opposed to changes on capital gains at death, the Journal writes.
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