President Biden's proposal to raise capital gains rates to 44.6% has sparked significant discussion, but it's essential to understand the nuances behind this figure.
The 44.6% rate is the result of several interconnected proposals, including raising the top ordinary rate to 39.6% and increasing the net investment income tax rate.
However, this rate would only apply to individuals with taxable income above $1 million and investment income above $400,000.
Despite the attention-grabbing percentage, the proposal is aimed at ensuring high earners contribute proportionally to their substantial financial activities, rather than imposing a blanket increase on all taxpayers.
Ultimately, the goal is to level the playing field between high ordinary income and investment income earners, rather than imposing undue burdens on small-business owners or ordinary taxpayers.