They’re going to raise the tax rate on those evil millionaires making..$523,600 a year.
President Joe Biden detailed his $1.8 trillion American Families Plan during his SOTU, which is all about the government taking advantage of the pandemic to expand government and spending.
The plan, which is the second part of Biden’s so-called infrastructure bill, concentrates on students and workers.
- Universal prekindergarten
- Federal paid leave program
- Money to make child care more affordable
- Free community college
- Aid for students at historically nonwhite communities
- Expand subsidies under Obamacare
- Extending federal efforts to fight poverty
Here comes the heartless libertarian! The left will scream I hate children or something, but geez. The government is opening doors to your personal life. You think they will stop here?
The Democrats want to extend the child tax credit through 2025 and make it “permanently refundable“:
That plan raised the $2,000 per-child CTC to $3,000, set the credit at $3,600 for parents of children under age 6 and made parents of 17-year-olds eligible. It also made the credit fully refundable, so low-income households would get the full benefit, no matter how little they earn. For a household with a 4-year-old and 7-year-old that doesn’t earn enough to pay income taxes, the plan would boost their maximum child tax credit to $6,600 from $2,800. The March law also ordered the Internal Revenue Service to start making periodic payments of the credit, which should start this summer.
I honestly don’t know how this would work, but the Democrats want to make sure non-wealthy families do not pay more than 7% on child care:
To lower the cost of child care, the American Families Plan would guarantee that low- and middle-income families pay no more than 7% of their income on child care for children under 5 years old. According to the administration, this would save the average family $14,800 a year on child-care expenses. The mechanism for paying for this is unclear—the Biden plan just says that families will have their costs covered according to that formula.
The amount families pay would be based on a sliding scale, from low-income families whose costs would be fully covered to families earning 1.5 times their state median income, who will pay no more than 7% of their income.
Free preschool and community college? I mean, how!? The Democrats claim it will cost $200 billion over 10 years:
The administration wants to add four more years of free schooling for all Americans, two on the youngest end in the form of universal prekindergarten for three- and four-year-olds, and two after high school in the form of tuition-free community college.
The preschool program would apply to families of all income levels and would cost $200 billion over 10 years, though according to the administration it would “prioritize high-need areas.” The plan promises teacher training, wages of at least $15 an hour for all employees, and compensation similar to that of kindergarten teachers for educators with comparable qualifications.
Then $109 billion goes towards community college. Biden wants to increase Pell Grants $1,400 from $6,495. Pell Grants are awarded to a student who has an “exceptional” need for financial aid.
The Democrats want to enforce a paid leave program. I assume this also applies to the private sector:
The Biden plan’s paid leave program would take a full decade to fully implement, and would cost $225 billion over that period. It starts slowly, ensuring workers get three days of bereavement leave a year. By the 10th year of the program, it will have scaled up to guarantee 12 weeks of paid parental, family and personal illness leave.
It will pay workers up to $4,000 a month, with a minimum of two-thirds of average weekly wages replaced. For low-wage workers that could be closer to 80% of their wages.
Reading about the tax hikes in the plan makes me replay the best portion in Parks and Recreation history. I swear the show had a libertarian on staff.
I thought it was all about making millionaires and billionaires paying their fair share.
Since when did we start calling a person making $523,600 a year a millionaire? A couple making a combined income of $628,300 is a millionaire couple? I’m so confused.
Those people are in the top tax rate, which will go up to 39.6% from 37%.
The Democrats, who are worth millions, apply their hatred of millionaires when it comes to tax rates on dividends and long-term capital gains.
This is what the Democrats want:
Long-term capital gains are assets held for more than a year. Short-term capital gains are the assets held for less than a year
They would increase more sharply for households making more than $1 million, from today’s 23.8% to 43.4%, including a 3.8% tax on investment income. According to the administration, that would affect 0.3% of households, where investment income is concentrated.
Currently, there is a 3.8% tax on investment income and an equivalent set of taxes on wages and self-employment income. The administration, citing holes in the law, says it would apply those taxes consistently to income over $400,000.
That could mean applying a 3.8% tax to the active income earned in businesses such as S corporations and partnerships. Mr. Biden used a common technique involving S corporations to avoid the 3.8% tax on much of his speech and book income after he left the vice presidency.
Did you think the Democrats would give you a break after a loved one passes away? Of course not! Tax all the things:
Currently, people who own appreciated assets owe capital-gains taxes when they sell. If they die, that entire gain goes untouched by the income tax. Their heirs then pay capital-gains taxes only if and when they sell and only on the gain since the original owner’s death.
By contrast, the Biden plan would treat a bequest other than a charitable donation as a sale for tax purposes. So an individual who bought a business for $2 million and dies when it is worth $9 million would have a $7 million capital gain on his final tax return. The Biden plan would offer a $1 million per-person exemption to reduce that taxable gain to $6 million. The existing exclusions of up to $500,000 for the principal residence of a married couple would also remain.
God forbid people use the tax code to help their gains escape the income tax:
That change would prevent some gains from escaping the income tax entirely. And without that change, the rate increase on capital gains would actually lose money. That’s because with a higher capital-gains rate—likely anything above 28%—asset holders would become more likely to hold on to their unrealized gains and wait to pass them to heirs rather than sell them.
The potential tax at death would change that calculation because there would be no significant tax benefit from holding assets until death. The estate tax, which Mr. Biden proposed to increase during his 2020 campaign, wouldn’t change under this plan. That’s based on someone’s total net worth, not the value of their unrealized gains alone.
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