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(Photo: Al Drago-Pool/Getty Images)

In the next few days, the White House will unveil long-awaited details for most of the tax-the-rich proposals President Biden has been promising since last year's campaign — laying the groundwork ahead of an April 28 speech to lawmakers timed around his first 100 days in office.

What we're hearing: Think of Biden's plans to increase the top marginal rate to 39.6% and the capital gains rate to 43.4% for the wealthiest Americans as opening bids.

  • Democrats close to the White House believe that the amount of revenue that the IRS can collect on capital gains actually decreases past a certain point, probably in the low 30% range. That means the ultimate capital gains rate could be well below 43.4%
  • Officials haven't yet made clear whether the capital gains rate would apply in 2022 — or in 2021, which would allow the IRS to harness some of the massive earning in the equities market this year.

Why it matters: Practically and politically, the White House needs to buy-in from Congress to find fresh revenue to pay for the next phase of his plan to reshape the American economy.

  • That includes more than $1 trillion in new spending on child care, free community college and paid family leave that he'll lay out in his first address to a joint session of Congress.

Driving the news: We saw some jitters Thursday around leaked elements of the plans as administration officials worked to finalize their rollout — even though Biden has been telegraphing his plans for months and experts don't expect major surprises and also don't expect many of the proposed rates to be fully adopted.

  • The Dow closed down more than 300 points after Bloomberg News first reported on some of the plan's expected details.
  • Goldman Sachs sent out a research note Thursday evening entitled, “No Surprises in President Biden’s Reported Capital Gains Proposal." It predicted: “We expect Congress will pass a scaled back version of this tax increase."

The big picture: The tax component to Biden’s American Families Plan is animated by two principles.

  • Philosophically, he wants the rich to contribute a larger share of federal taxes
  • Practically, he needs to find fresh revenue to pay for the next phase of his plan to reshape the American economy.

Biden has long telegraphed his intent on personal income taxes, just like he did on trying to raise the corporate rate from 21% to 28%.

  • Throughout the campaign, Biden vowed to raise taxes on households that make more $400,000 and to treat capital gains as regular income.

By the numbers: Biden arrives at his headline 43.4% rate on capital gains for assets over $1 million by taxing them at the top marginal rate, which he wants to increase to 39.6%, plus the additional 3.8% existing surtax from the Affordable Care Act.

  • Biden is making an end-run around "carried interest," a term of art in the private equity industry, which allows employees to have some of their compensation taxed at 20%, instead of the top marginal rate, currently at 37%. Biden would end carried interest without calling attention to it.

What we're watching: Biden also is likely to raise more revenue from the wealthy by making changes to estate taxes.

  • Biden wants to impose so-called "stepped up basis" for accounting purposes, and value assets when they are passed on to an heir, not at their original cost.
  • The White House thinks that change could lead more individual to liquidate their assets before they die, allowing the IRS to tax them then instead of encouraging families to keep passing on them for more favorable tax treatment.

Go deeper

Updated Jul 30, 2021 - Politics & Policy

Military members will be included in Biden's new COVID guidance

Joe Biden. Photo: Anna Moneymaker/Getty Images

Members of the military will be required to get vaccinations or face regular testing, social distancing, mask mandates and restrictions on travel for work, the the Pentagon said on Thursday evening.

Why it matters: The policy was announced for federal workers and onsite contractors earlier on Thursday, part of several new Biden initiatives to get more Americans vaccinated and slow the spread of the Delta variant.

Bryan Walsh, author of Future
27 mins ago - Politics & Policy

Axios AM Deep Dive: America’s murder surge

Photo illustration: Sarah Grillo/Axios. Photo: Erik McGregor/LightRocket via Getty Images

Homicides rose at the fastest rate in at least six decades last year. This Axios AM Deep Dive, led by Future correspondent Bryan Walsh, looks at the state of gun crime.

4 hours ago - Politics & Policy

Senate Democrats target billionaires

Illustration: Annelise Capossela/Axios

After failing to get a deal on other planned tax increases, key Senate Democrats are pivoting to a billionaires' income tax to pay for President Biden's social spending.

The big picture: No advanced economy has attempted anything similar on such a scale.

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