Can the President collect taxes?

US President Biden wants to double capital gains tax for the rich

Washington - US President Joe Biden is planning a massive increase in capital gains tax for the country's richest citizens. The head of the National Economic Council, Brian Deese, confirmed media reports on Monday that the tax had actually doubled to almost 40 percent. Affected are only 0.3 percent of the population with an annual income of more than one million dollars (830,000 euros).

"We have to do something to equalize taxation on labor and wealth in this country," said Deese. Biden is due to introduce the tax as part of his "American Families Plan" on Wednesday in an anticipated speech to Congress. Because of the narrow majorities there, it is unclear how much of his plans he can implement.

Highest level since the 1920s

The media reports about the tax increase had initially led to price losses on Wall Street, but also on the European stock exchanges. Together with an existing additional levy, the corresponding tax burden would reach 43.4 percent. That would be the highest level since the 1920s. Since the federal government and the states levy their taxes separately in the USA, the quota for citizens in California or the state of New York would rise to over 50 percent.

Currently, US citizens pay a maximum of 20 percent capital gains tax if they hold securities such as stocks for a minimum amount of time. An additional tax of 3.8 percent is levied on an annual income of more than $ 200,000 and goes in part to the health program introduced by then President Barack Obama. You should stay according to the earlier information. Biden's new plan should therefore have a total volume of one trillion dollars. He has already put forward a $ 2.3 trillion infrastructure program that Congress is currently studying.

Vienna, Berlin and Paris welcome US proposal

There are already reactions to the plans from Europe: The global minimum tax rate of 21 percent for companies brought into play by the USA is "a constructive approach," says Finance Minister Gernot Blümel (ÖVP). More tax justice and fair framework conditions would also help domestic companies, "therefore we welcome the US proposal in principle", even if the exact amount of the minimum tax rate is still open. There must be fair taxation above all between digital and analog business models.

Germany and France would also support the global minimum tax rate of 21 percent for companies. "Personally, I would have nothing to object to the US proposal," said German Finance Minister Olaf Scholz (SPD) in a conversation published on Tuesday with "Zeit Online" and the French newspaper "Le Figaro". His French counterpart Bruno Le Maire also agreed.

The finance ministers from Germany and France were confident that an understanding could be reached this summer in the debate on reforming the international tax system. This is managed within the framework of the industrialized nations organization OECD. The goal is a fairer taxation of large corporations, especially digital companies.

Le Maire announced that in such a case the French digital tax that had already been passed would be removed. "As soon as there is an international agreement on both digital tax and minimum taxation, we will withdraw our national digital tax," he said. "But let me be very clear here: in the event that there is no agreement at international level, we will keep it." (APA, red, April 27, 2021)