I am sure there are benefits for many Americans in the $3.5 trillion American Families Plan. The concern is how to pay for these benefits, i.e. family leave and many anti-poverty benefits.
The Democratic Congress is suggesting increasing the top federal long-term capital gains and qualified dividends from 23.8% to $39.6% for higher earners. When including the net investment income tax, the top federal rate on capital gains would be 43.4%. The rates would be even higher in many states due to state and local capital gains taxes, leading to a combined average rate of 48%, compared to about 29% under current law.
These changes will impact not only high earners but have a major impact on small businesses and corporations. Business has two options to offset the costs. Prices can be raised, which will be inflationary, or instead of making business improvement investments, the increased taxes will be paid and capital expenditures reduced.
Last year, 61% of U.S. people filing returns did not pay any taxes to the IRS. The bill also wants to increase the corporate tax rate from 20% to 28%. These tax increases could have a negative impact on business. employment and corporations will once again look at offshore relocation.
Everyone should know and understand how these bills will impact them.