December 7, 2023

Brian Deese, director of the National Economic Council, holds a press conference in the Brady Briefing Room of the White House in Washington, DC on April 26, 2021.

Brendan Smialowski | AFP | Getty Images

President Joe Biden’s chief economic adviser on Monday defended a plan to increase capital gains tax on the country’s richest households as neither too much of a burden nor as a barrier to business investment.

Brian Deese, director of the National Economic Council, said during a news conference that the president’s plan would increase capital gains tax for 0.3% of US households – those with annual incomes above $ 1 million.

It’s “not the top 1%, it’s not even the top half of 1%,” said White House Deese. “For the other 997 out of 1,000 households in the country … this is not a change that will be relevant. It will not change the tax treatment of capital gains at all.”

He explained that the proposed tax hike would target those households who normally do not receive most of their income from work-place wages.

“For typical Americans, most of their income comes from wages,” he said. “For people who earn less than $ 1 million a year, about 70% of their income comes from wages. For people who earn more than $ 1 million, the opposite is the case. About 30% of their income. ” [income] comes from wages. “

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Though Deese didn’t mention a specific interest rate, his appearance Monday during a White House briefing gave credence to reports that the government will seek to raise the capital gains rate to 39.6% for households earning more than $ 1 million .

Biden is expected to officially launch the proposal on Wednesday to fund spending on the upcoming American family plan, which is said to be priced at around $ 1 trillion.

Separated from the US infrastructure-based employment plan, this bill is believed to include measures designed to help US workers learn new skills, expand childcare subsidies, and make tuition fees free for everyone at Community College.

When responding to criticism that increasing the capital gains rate could dampen investment in the US business, Deese argued that there is no evidence to support this claim. Capital Gains Tax is especially important to Wall Street as it dictates how much a portion of a stock sale is collected by the federal government.

“In a variety of academic and empirical data, there is no evidence of a significant impact of capital gains rates on the level of long-term investment in the economy,” he said. “There are many reasons for this, including the fact that if you look at where a lot of venture capital and early-stage investments are coming from, they are actually coming from pension funds, wealth funds and corporations that are actually not tax sensitive.”

Deese also claimed that the revenue generated by a higher rate for the richest Americans could then be used for programs and subsidies that have been shown to increase economic performance over time.

“Investing in early childhood and our children, for example, yields huge dividends in terms of their own academic success, reduced health care costs, productivity and future growth,” the NEC director and former Obama official told reporters.