Joe Biden to unveil historic tax increase for the rich

Joe Biden to unveil historic tax increase for the rich

These measures are part of White House's push for overhaul of the US tax system

US President Joe Biden will soon roll out plan to raise taxes for the wealthiest Americans, said Reuters quoting sources familiar with the proposal. This proposal is likely to include largest-ever increase in levies on investment gains. The increased revenue is likely to be used in childcare, universal pre-kindergarten education and paid leave for workers.

These measures are part of White House's push for overhaul of the US tax system that will make rich people and big companies pay more in taxes. The proposal calls for increasing the top marginal income tax rate to 39.6% from 37%, the sources said this week. It would also nearly double taxes on capital gains to 39.6% for people earning more than $1 million.

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This would be the highest tax rate on investment gains. The rate has not exceeded 33.8 per cent after Second World War.

Wall Street reacted to the news of the proposal. The news triggered sharp declines with the benchmark S&P 500 index down 1% in early afternoon. This was its steepest drop in more than a month.

The tax hike would need to pass through US Congress. Biden's Democratic Party holds narrow majorities in US Congress. The proposal is expected to face tough resistance from the Republican Party.

Sources said details would be released next week before Biden's address to Congress on Wednesday. Details of the plan may change in coming days. White House officials are debating other possible tax increases that could ultimately be included such as capping deductions for wealthy taxpayers or increasing the estate tax, sources told Reuters.

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