The tax increases would [end the preferential treatment of capital gains income for those making over $1 million per year, and] reverse some of the tax cuts passed in 2017 by former president Donald Trump and are expected to track Biden's campaign proposals, which targeted individuals earning more than $400,000 per year.

Among them are an increase in the top income tax rate from 37 per cent to 39.6 per cent and the application of ordinary income tax rates to capital gains and dividend payments for Americans earning more than $1m a year.

Coupled with a surtax on investment income for the wealthy introduced at the time of Barack Obama's health reform, this would bring the total capital gains tax rate for the richest Americans to 43.4 per cent.

The rates proposed by Biden would hit private equity and hedge fund managers by effectively eliminating the preferential tax treatment of their profits -- or "carried interest". At the moment, carried interest is taxed at the lower capital gains rate rather than ordinary income, but Biden would equalise their tax treatment. 

The president has also been considering taxing unrealised capital gains passed on to heirs at death, and increasing payroll taxes on the wealthiest Americans.


As he pushes ahead with the new tax-and-spend proposal for childcare and education, Biden is struggling to gain momentum on Capitol Hill for his infrastructure plan.

Senate Republicans proposed their own $568bn plan on Thursday -- far below the levels of spending sought by the White House. The Republican offer is heavily weighted towards traditional infrastructure projects, with $299bn devoted to roads and bridges, $65bn to broadband, $61bn to public transit systems and $44bn to airports.

By contrast, the White House plan seeks broader investments in research and development, manufacturing subsidies and retooling buildings, while devoting much more federal funding towards tackling climate change -- a priority for many Democrats.

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