Joe Biden is planning large tax increases if elected president next week. He says that the increases would be just for high earners, but his proposals would hit all of us by damaging investment, entrepreneurship and job opportunities.
Perhaps Biden’s worst idea is to raise the top federal capital gains tax rate from 23.8 percent to 43.4 percent. That is a radical proposal. Congress has kept long term capital gains tax rates below rates on ordinary income for most of the past century, and nearly all other advanced economies provide favorable tax rules for gains. The current top U.S. capital gains tax rate including the average state rate is about 28 percent, but the average top rate across Europe is just 19.5 percent.
A capital gains tax increase would harm investment in start‐up and growth companies, and it would undermine entrepreneurship. Another loser would be state governments. If Biden hikes the federal tax rate, then both the federal and state tax bases would shrink. State tax revenues in states such as California and New York that depend on capital gains would fall.
If Biden wins, he should reconsider his tax policy proposals. A capital gains tax increase would damage U.S. technology industries for no good reason and reduce state tax revenues. As Biden might say, “come on man,” that makes no sense.
Read more in my op‐ed in The Hill.