President Biden’s latest proposal to hike the top capital gains tax rate to its highest level in more than a century is facing heavy criticism from experts who warn such an action could significantly harm the U.S. economy.
According to a report issued by the Treasury Department, led by Secretary Janet Yellen, the president’s proposed fiscal year 2025 budget would increase the top marginal rate on long-term capital gains and qualified dividends to a staggering 44.6%. A capital gains tax hike of that magnitude would take the rate to its highest level since it was first introduced in the early 1920s.
“Investment is the real driver of economic growth,” E.J. Antoni, an economist and research fellow at The Heritage Foundation, told Fox News Digital. “Investment is what gives you productivity gains. Investment is where you get factories and machines — it’s where businesses are able to provide their workers with tools and equipment that allow them to increase their productivity, to increase wages, etc.”
“If you’re going to tax something, you get less of it,” he continued. “And that’s just as true for investment as it is for anything else. Taxing capital gains means less investment, it means less economic growth, and it means the rise in people’s standards of living is going to slow dramatically.”
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According to the Treasury Department, President Biden’s proposal would hike the top tax rate to a staggering 44.6%, potentially stifling future investment. (Chip Somodevilla/Getty Images | Alex Wong/Getty Images)
The Treasury Department’s report states that the 44.6% rate is a combination of proposals, including increasing the top ordinary capital gains rate from 20% to 37%. The bulk of the tax hikes impact Americans with taxable income greater than $1 million.
But Antoni, who argued such a tax hike would have broad economic impacts, further noted that inflation impacts the price of equities, such…
