It’s perfectly legitimate to say Joe Biden wants to increase the top capital gains rate to 43.4 percent. Biden has proposed raising it to 39.6 percent for families that earn $1 million or more. But when you add Obamacare’s 3.8 percent net investment tax on families whose investment income exceeds $250,000 ($200,000 for individual filers), then yes, Biden’s proposed capital gains rate is 43.4 percent.
But I really don’t want to hear that from Larry Kudlow of Fox Business News. As recently as January, Kudlow was director of President Donald Trump’s National Economic Council. When Trump pledged last August to drop the capital gains rate to 15 percent, the nation’s leading financial newspaper asked Kudlow whether that 15 percent would include the 3.8 percent net investment income tax. He flat-out refused to answer. In any event, the capital gains rate remained 20 percent—or rather, 23.8 percent—for the remainder of Trump’s term.
My latest, for the New Republic, is about Biden’s capital gains proposal. The proposed 39.6 percent rate matches Biden’s proposed top marginal tax rate on labor income, and therefore, I argue, it amounts to taxing corporations the same as the people that the Roberts court insists they are. If adding the Obamacare tax raises Biden’s proposed top cap gains rate to 43.4 percent, then that’s easily fixed by creating a new 43.4 percent tax bracket on incomes over $1 million. That is, I argue, what Don Regan, Ronald Reagan’s Treasury secretary—and, before that, chairman and CEO of Merrill Lynch—would want. (That’s Regan pictured above.)
When Regan was Treasury secretary Kudlow was working as an economic aide in the White House budget office, but Kudlow doesn’t seem to have absorbed the Regan gospel that capital gains should be taxed at the same rate as income. Like a lot of self-professed Reagan revolutionaries, Kudlow has a selective memory about what the Gipper stood for.