EXPLAINER: Capital gains tax hike targets wealthy investors.

After massive U.S. government spending helped send the stock market back to record heights, with even more potentially on the way, the bill may be coming due for the nation's wealthiest investors.

President Joe Biden is proposing to nearly double the tax rate the highest-earning Americans pay on profits made from stocks and other  ดาวน์โหลด และ ติดตั้ง slotxo  investments. It would force millionaires to pay similar tax rates on their investment gains as upper-middle class households pay on their salaries, after years of enjoying lower rates.

It's part of Biden's efforts to tax wealthy people and corporations to pay for infrastructure investments and programs aimed at helping the broader economy. The most recent proposals, which Biden will detail in a speech before Congress later on Wednesday, focus on lower-income families and children. They include universal preschool for 3 year olds, two years of free community college and the extension of tax cuts for lower- and middle-income families.

Even though the possibility of higher capital-gains tax rates has been telegraphed for a long time, reports of its pending unveiling shook up the stock market, with the S&P 500 falling to a nearly 1% loss on Thursday. Stocks have since set more records, but the kneejerk reaction shows how much investors care about potential changes in tax rates.

WHAT IS THE CAPITAL GAINS TAX?

The capital gains tax must be paid on profits made from an investment, such as a stock or a Bitcoin. But it only takes effect after a sale locks in the gain. So if you bought a share of Tesla at $ 200 early last year and are sitting on a profit of more than $ 500, you won owe anything unless you sell.

If you do sell, and you are one of the highest-earning Americans, current law says you’d pay a 23.8% tax on a $ 500 profit, or $ 119. That includes a 20% tax on investments held for more than a year, known as a “long-term capital gains" tax. It also includes an extra 3.8% tax on investments for high earners that's been around since 2013 to help pay for the Affordable Care Act.

WHAT IS BIDEN LOOKING TO CHANGE?

Biden wants to raise the tax rate on long-term capital gains for Americans who make more than $ 1 million in a year. Their rate would rise to 39.6% from 20%. With the additional 3.8% tax, the highest-earning Americans could be paying a total tax rate of 43.4% on profits from long-term investments.

That would be the highest top rate since the 1920s, according to the Tax Foundation, and the proposal could make the rate on investment gains similar to the rate on income made from working.

The top tax rate that workers pay on salaries and wages now is 37%. Biden wants to move the top tax rate on work income up to 39.6%, which is where it was before the 2017 tax cuts.

One reason tax rates have been lower on long-term capital gains than for regular work is that supporters say it encourages long-term investment and helps the economy.