Biden’s Tax Policies: It’s Happening! (Probably)

TL;DR: Before Georgia went blue in the senate, we had an article about potential Biden tax policy changes. Now with democrats in charge of the house/senate/presidency, these changes seem much more likely.

The new tax policies have the full intention of having no nominal change to most of Americans, but the wealthiest can expect to pay more. The main changes are:

• People who make over 400k might expect their marginal tax rate to increase from 37% to 39.6%
• Social security taxes, which right now is a 12.4% tax split between employee and employer that phases out at an income of $142,800, might now be re-introduced for those earning over 400k
• Long term capital gains and qualified dividends, which historically got preferential treatment, might be taxed at the ordinary income rate for those earning over $1million
• Corporate tax rates might be hiked from 21% to 28%

There’s some talk about how this will affect stocks. Intuitively it’s negative, but unclear how bad. You might expect corporate bottom lines to be affected (directly through taxes), and it’s possible some long-term holders who have significant gains will sell their shares now to avoid more tax liability later.

Also even though these taxes are now more likely, it’s unclear how soon they’d be enacted.

Hope this was a helpful summary!

TheJKW