The Tax Biden Wants to Double and Trump Would Slash

Bloomberg
Up or Down Simon Mayer Bloomberg | James Alexander Michie

Up or down. PHOTOGRAPHER: SIMON MAYER/ISTOCK VIA GETTY IMAGES

A capital gains tax is a tax on profit (surplus value) obtained by the sale of an asset that was purchased at a certain cost that was lower than the amount subsequently obtained with the sale. The most common capital gains are made from the sale of stocks, bonds, precious metals, and property. Not all countries apply a capital gains tax and most have different taxes for individuals and corporations.

Even so, they apply in the United States. In this way, this tax has become somewhat controversial. And it is news that it is the tax that Biden wants to double and Trump would cut.

Certainly, capital gains taxes are the price of making a good investment. They apply to operations with profitable shares and real estate businesses, but they can also be applied to business sales, works of art, collectible cars, gold, and other assets.

Options on the table

For its part, the administration of President Donald Trump is looking for ways to reduce capital gains tax bills for investors, while Democrats seeking to challenge him in 2020 have put a tax increase on the table.

It should be noted that investors pay taxes on the difference between what they paid for the asset and what they sold. Currently, the federal rate in the US It reaches 20%, well below the upper marginal rate of 37% in wages and salaries. As with all investments, an additional 3.8% tax is applied to capital gains earned by people earning at least $ 200,000 or married couples earning $ 250,000, to fund the health of the United States. The insurance subsidy program is known as Obamacare.

Although anyone can have capital gains, generally the richest taxpayers are those who obtain most of their wealth from the capital gains from the investments. In fact, according to the tax return data of the Internal Revenue Service, more than 59% of taxpayers who earn at least $ 250,000 reported earnings for capital gains in 2017, compared to 15% of those who earn from $ 50,000 to $ 100,000. And some low-income taxpayers do not pay the tax at all: married taxpayers who earn up to $ 39,375 pay a capital gains rate of 0%. The owners also have a rest. The first $ 250,000 in income from the sale of primary residences is exempt from capital gains taxes for a single person or double for a married couple.

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Source: Laura Davison | Bloomberg

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