The White House is preparing for the political struggle for the tax hike of the rich

Joe Biden’s top economic adviser said there was no evidence that raising capital gains taxes would hurt long-term investment in the US economy as the White House prepares to fight for months during its plans. to impose higher rates on the rich. finance a massive increase in spending.

Speaking to reporters at the White House on Monday, Brian Deese, director of the National Economic Council, said there has been “no correlation” between capital gains tax rates and investment or global economic growth in recent years. 30 or 40 years.

“In a broad set of academic and empirical evidence, there is no evidence of a significant impact of capital gains rates on the level of long-term investment in the economy,” Deese said.

“There are many reasons for this, including that if you look at where a lot of venture capital and early stage investment comes from, it actually comes from pension funds, sovereign wealth funds. [and] entities that are not really tax sensitive. Also because, after all, there are many things to make an investment decision “, he added.

This week, Biden is expected to propose a new economic package worth more than $ 1.5 million in government funding for child care, paid leave and education programs, including universal access to school classes. ‘childhood education. The plan will be rolled out when Biden delivers his first speech at a joint session of Congress, on the eve of his 100th day as president.

To pay for the package, the White House abruptly proposes raise taxes on the richest Americans, including nearly double the taxes on capital gains and dividends for taxpayers who earn more than $ 1 million a year, collision course with Wall Street and Silicon Valley.

Any plan should be approved by lawmakers, which could be a high order given Capitol Hill’s meager Democratic majorities and an inflatable economic agenda that also includes $ 2.5 billion infrastructure plan financed in part by increases in corporation tax.

The White House is not expected to face fierce resistance from Republicans over projected capital gains tax hikes, but also some skepticism. moderate democrats in swing neighborhoods and even Liberal Democrats of rich urban regions and states. Business groups are likely to push hard against any increase.

The Biden administration is betting that tax increases for the wealthiest will not be as politically toxic as feared, and could even be popular as a result of large gains in equity markets recorded by the wealthiest households in the world. America during the coronavirus pandemic.

Biden administration officials will also stress that any success in well-to-do families, representing only 0.3% of taxpayers, will be offset by the benefits of the spending plan, which Deese said would increase of labor and future economic competitiveness “.

Deese noted that former Republican President Ronald Reagan had advocated equating capital gains tax rates with normal income rates, which is what the Biden administration is trying to do.

However, while Reagan raised rates to 28%, Biden wants to increase capital gains taxes for high-earners from 20% to 39.6%, up to 43.4% if a rate on capital gains is included. health on investment income.

Deese, a former Obama administration economic official, also noted that Warren Buffett, the investor, had supported an equalization of the two rates, not considering that he would have to pay a higher percentage than his secretary.