In the US, the Biden administration is set to unveil a plan to tax the rich more. The plan is said to have been instrumental in the decline in cryptocurrencies, especially US exchanges and Bitcoin.
In the US, Joe Biden’s administration is planning a tax increase for the wealthy to fund the ‘American Families Plan’. The press release of his plan yesterday negatively affected the markets.
The Biden administration is preparing to nearly double the capital gains tax collected from people with annual incomes of more than $1 million, Britain’s Financial Times reported.
Tax increases for people with annual incomes exceeding $400,000 will be used to fund an increase in childcare and education spending. The administration wants to devote more resources to universal kindergarten education and public education centers by 2025.
The economic package, worth more than $1 trillion, could be announced at a joint session of Congress next week, where Biden will make his first appearance as U.S. President.
The Biden administration will reject some of the tax cuts for the rich under Donald Trump in 2017.
For the top tranche of income tax, the rate would be increased from 37 percent to 39.6 percent, and taxes would be increased for Americans whose income exceeds $1 million a year for capital gains and dividend payments.
The capital gains tax rate for the rich could reach 43.4 percent, along with an additional tax on investment income for the rich under Barack Obama.
Biden’s plan could negatively impact managers of private equity funds and hedge funds, and increase the tax paid by those executives, who are currently taxed at low rates on the success premiums they receive.
The administration is also considering taxing unrealized capital gains transferred to heirs in death and increasing payroll taxes for the wealthiest Americans.
The U.S. S&P 500 index lost 1 percent following the news.
Shana Sissel, chief investment officer at Spotlight Asset Group, said that if Congress approves the tax plan, which is set to be implemented next year, the market will continue to lose money, and investors will want to realize their earnings before taxes increase.
“We’re going to see people sell a lot more before the law comes out,” Sissel said.
Biden, who became president in January, launched a $1.9 trillion financial support package in March.
A $2 trillion infrastructure package was later announced. This package hasn’t passed Congress yet.
The Biden administration plans to strengthen the middle class in the United States, which has melted in recent years by increasing spending on children and families.
The Biden administration also plans to raise corporate taxes on corporations by $2.5 trillion annually, to 28 percent. Negotiations are ongoing between the giant corporations and the White House on this issue.
BLOOMBERG: TAX PLAN CRYPTO MONEY negatively affected
Bloomberg reported that the new U.S. tax plan was instrumental in yesterday’s decline in cryptocurrencies, especially Bitcoin.
Bitcoin, which set a record with $64,870 on April 14, has now fallen to $48,248.