John Delaney understands investing. Before entering politics, he made a fortune by founding finance companies that raised $20 billion in capital for businesses.

Which lends extra credibility to one proposal in Delaney’s long-shot 2020 presidential campaign. He wants to raise the 20 percent top tax rate on long-term capital gains, saying investors no longer need the enticement of a lower rate on profits than on ordinary income.

“It’s hard to make an argument that we have a shortage of investment capital,” says Delaney, a Democratic former House member from Maryland. “The notion that we need a lower capital gains rate in general to get people to invest is not accurate.”

His idea sends Wall Street a bracing signal of what 2021 might bring. Not only do Democrats want to raise taxes on the wealthy, but an increasing number find taxes on investment profits the most appealing target.

Higher capital gains and estate taxes “are more consistent with a story about work versus wealth, so therefore more attractive from a thematic point of view,” reasoned Jake Sullivan, who coordinated policy for Hillary Clinton’s 2016 campaign.

“Things like the millionaires surtax we proposed in 2016 now feel kind of boring,” Sullivan added. “It’s not that raising income taxes on millionaires isn’t politically saleable, it’s just not as compelling as taxing returns to wealth.”

The growing blue-collar tilt of the Trump-era GOP base makes the target even more tempting. Though business-friendly GOP congressional leaders resist all tax hikes, rank-and-file Republicans back capital gains increases more than other kinds, said Democratic pollster Geoff Garin.

The top rate on capital gains last matched the top rate on labor income after the bipartisan 1986 tax reform signed by President Ronald Reagan. It set both at 28 percent.

Subsequently, the rate on capital gains edged down, while the rate on income edged up. Estate taxes have fluctuated in rates and the size of estates subject to tax.

The 2017 tax cut signed by President Donald Trump reduced the top rate on income to 37 percent from 39.6 percent, but left the top capital gains rate unchanged; for both, the highest earners face the additional 3.8 percent tax enacted to help finance Obamacare. The estate tax remained at 40 percent, but the law reduced the number of taxable estates by doubling exempted amounts to $11 million for individuals and $22 million for married couples.

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