Biden Wants To Double Capital Gains Tax For The Rich To Fund Child Care And Education
The president will unveil his American Family Plan — following the American Rescue Plan and Jobs Plan — during his first major speech to Congress.

President Joe Biden is considering doubling the capital gains tax rate and raising the marginal tax rate for America’s top earners in order to pay for his ambitious policies on child care and education.
The New York Times and Bloomberg News first reported on Thursday that Biden will propose raising the capital gains tax for people earning more than $1 million annually as well as raising the top marginal income tax rate to 39.6% from where it currently is at 37%. The current capital gains tax rate is 20% for America’s wealthiest. As he promised during the 2020 campaign, Biden will not raise taxes on households earning less than $400,000.
Biden will present his proposal, called the American Family Plan, in detail in his first major speech before Congress on April 28. The Times reported that it will include $1.5 trillion in spending to fight poverty, including making pre-K and community college free and cutting family child care costs.
White House Press Secretary Jen Psaki confirmed Thursday that the administration is still “finalizing what the pay-fors look like.” Psaki added that the president believes investing in areas such as education and infrastructure “can be on the backs of the wealthiest Americans who can afford it.”
Bloomberg reported that the proposal could “reverse a long-standing provision of the tax code that taxes returns on investment lower than on labor.” A study from the Tax Policy Center estimated that the capital gains increase proposed by Biden could raise $370 billion over ten years.
So far, Biden has unveiled the American Rescue Plan, focused on providing immediate COVID-19 relief, and the American Jobs Plan, focused on creating new jobs through major investments in infrastructure and sustainability.
The American Rescue plan, passed by Congress in early March, already represents a generationally historic shift in welfare policy. Multiple studies have found a lesser-covered but no less crucial benefit: the bill could cut child poverty in half in 2021.
“I would say this is the biggest anti-poverty plan we’ve seen in the country since the [expansion] of Social Security back in the 1960s,” Zachary Parolin, a Columbia University researcher, said in an interview with NowThis.
Biden will seek to continue that poverty reduction with longer-term investments, including extending an expanded tax credit for parents through 2025. (The American Rescue Plan extended it through the end of 2021.)
Parolin told NowThis that the credit “is the closest thing we’ve ever had to an unconditional cash transfer to families with children.” He also cited other high-income countries, including in the European Union, that already give families with children “some type of cash benefit on a monthly or at least a regular basis.” Child poverty rates in Europe have historically been lower than in the U.S.
“The U.S. for a long time has been one of the only countries, high-income countries, without this type of support for families,” Parolin said.
The IRS will pay out the benefit periodically to recipients, according to the law, rather than as a sum wholly allocated to families as part of a tax refund. The benefits could start hitting accounts as soon as this summer.
New York Times reporter Jason DeParle wrote that despite the “technocratic terms” of expanding an existing tax credit, the benefit is “essentially a guaranteed income for families with children, akin to children’s allowances that are common in other rich countries.” The Times calls it a “policy revolution” in aid for children.