Death And Taxes (and an eternity of voting)

The history of American tax law is long and frankly, boring.

However for the most part since 1986, generally, the tax code has been only going one way on captial gains taxes, which is down. Given Biden's recent tax news, an increase proposed, The whale thought it worth looking at some of the other times tax bills were recommended, and how voting was done.

In 2017, Republicans as part of their Healthcare Act tried to repeal the 3.8% tax on all investment income for high-income taxpayers and the 2.5% "shared responsibility payment" ("individual mandate") for taxpayers who do not have an acceptable insurance policy, which applies to capital gains. It passed Congress but not the Senate.

In 2011, Obama commisioned a report that recommended “eliminate the preferential tax rate for long-term capital gains in exchange for a lower top rate on ordinary income”. Nothing occurred.

With Biden’s tax rate, one must wonder what will happen given median networth of Congress is over one million dollars and likely increased during the pandemic. Will they continue to trade with such vigor? Especially with some officials, trading 700 times in a year, putting 30 million into investments in a single year. Here are some notable bills previously, and their main relation to capital gains. It is important to note these bills are generally complicated and include many other things:

• 1)1986 Tax Reform Bill: repealed the exclusion of long-term gains, raising the maximum rate to 28%
• 2) Tax payer relief Act 1997: educed capital gains tax rates to 10% and 20% and created the exclusion for one's primary residence
• 3) The Economic Growth and Tax Relief Reconciliation Act of 2001 reduced them further, to 8% and 18%, for assets held for five years or more.
• 4) The Jobs and Growth Tax Relief Reconciliation Act of 2003 reduced the rates to 5% and 15%, and extended the preferential treatment to qualified dividends.
• 5) Trump's Tax Cuts and Jobs Act lowered the rates for top income bands

Biden, Pelosi, McConnell, Feinseten (all the high networth senators) were all in power during these periods (Pelosi at the CA level). Biden, McConnel, voted yes to the 1997 bill. Biden voted against the 2001 Bill, McConnel, Feinstein yes. The 2003 act, Biden, Feinsten no. McConnel yes. You can check the image below for the records on any relevant bills.

The Trump tax law can be seen explained beautifully here, Investopedia.
The major important line for noncorporations (as was mainly a corporate tax plan) on this most recent tax bill is that:The law retained the old structure of seven individual income tax brackets, but in most cases, it lowered the rates. The top rate fell from 39.6% to 37%, while the 33% bracket dropped to 32%, the 28% bracket to 24%, the 25% bracket to 22%, and the 15% bracket to 12%.10 The lowest bracket remained at 10%, and the 35% bracket was also unchanged. The income bands that the new rates applied to are lower, compared to 2018 brackets under current law, for the five highest brackets.

Biden's plan is still in early development, but here are the proposed main changes as per news (from The StreetInsider):

• 1) Marginal income tax rate to 39.6% from 37
• 2) Nearly doubling capital gains taxes to 39.6% from 20% for those earnings more than 1M.

The market dropped nearly 1% on the news, reversing a green trend day sharply. It is still too early to tell what will happen given this news, but notably, besides cryptocurrency purchases by Mark Green, two Senators have been selling their stocks at the beginning of April.


I'll report back with more info as more Congressional reports come through.