If the Biden administration gets its way, wealthy households are going to face higher tax rates.
Many millionaires appear to be OK with that.
More than half — 60% — of individuals worth $1 million or more support a wealth tax on people worth $10 million or more, according to CNBC’s latest survey of millionaires. And almost half (48%) support increasing the capital gains tax.
The survey, conducted online in April and May by Spectrum Group on behalf of CNBC, had 750 respondents with investable assets of at least $1 million.
While President Joe Biden has not proposed a wealth tax, per se, his requested 2022 budget includes some tax hikes on well-heeled individuals that are intended to help fund the American Families Plan. That proposed legislation would expand the social safety net by subsidizing child care for middle-class families, providing federal paid family leave and expanding child tax credits, among other initiatives.
One way Biden wants to finance that proposal is by raising the top marginal income tax rate to 39.6% from the current 37%. It would apply to individuals with taxable income of more than $452,700 and married couples filing a joint tax return with income over $509,300 in 2022, according to the Treasury Department.
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Biden also wants to subject millionaires’ capital gains to a 39.6% tax rate.
Those gains — the difference between an asset’s value when it’s sold and when it was acquired — currently have a top tax rate of 20% if the asset was held for more than a year (i.e., a long-term gain). Ordinary income tax rates already apply to short-term gains (for assets held a year or less).
The rate would apply to taxpayers whose income exceeds $1 million (or $500,000 for couples filing separate tax returns), according to the Treasury Department. Combined with the existing 3.8% net investment income tax that applies to wealthy individuals when appreciated assets are sold, it would mean paying a rate of 43.4% on capital gains.
The CNBC survey also showed that 58% of millionaires generally support raising taxes on corporations to fund infrastructure improvements, as floated in Biden’s other ambitious spending package, the American Jobs Plan.
Under that proposal, the corporate income tax rate would rise to 28% from the current 21%. That lower rate was enacted under the 2017 Tax Cuts and Jobs Act, a drop from 35%. (Biden has recently indicated a willingness to retreat from that 28%, according to published reports.)
Despite many survey respondents agreeing that taxes should rise for the wealthy and for corporations, 73% think their own tax burden is fair — and 21% say they’re paying more than their fair share.
Additionally, although most millionaires expect higher taxes under the Biden administration, 62% don’t anticipate making any changes to their finances because of it.