‘The entire country went red’: Grant Cardone slams Biden's 44.6% capital gains tax proposal, pointing to consequences faced by ‘the last guy who tried it’
President Joe Biden's budget proposal for fiscal year 2025 includes significant changes to the capital gains tax. This is the tax on qualified dividends and profits from the sale of assets like stocks, bonds and real estate.
The president’s budget promises to “end one of the most unfair aspects of our tax system.”
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Besides restoring the top marginal income tax rate to 39.6% from the current 37%, Biden wants the country’s wealthiest to pay the same tax rate on their investment income as middle-class families pay on their wages.
For the highest earners — those with taxable income above $1 million and investment income above $400,000 — the long-term capital gains tax rate could reach 44.6% with a combination of proposals.
Real estate mogul Grant Cardone is not a fan of this agenda.
“Biden proposes 44.6% capital gains tax, from current 19%. Can’t even come up with his own ideas taking a page out of Trudeau playbook who raised Canada to 66%,” he wrote in a recent post on X.
Currently the highest long-term capital gains tax rate is 20%, and high-earning individuals may have to pay an additional 3.8% net investment income tax (NIIT).
Cardone also cautioned about the potential political ramifications of such a change.
“And he ignored how that played out for the last guy who tried it… the entire country went red,” he added, sharing an image displaying the 1980 presidential election results, where Ronald Reagan won in a landslide with 489 Electoral College votes compared to Jimmy Carter’s 49.
Copying Trudeau?
Cardone’s mention of Trudeau relates to recent developments in Canada, particularly Prime Minister Justin Trudeau’s 2024 federal budget proposal, which raises the capital gains inclusion rate from 50% to 66.67% for certain high earners.
Currently, only 50% of capital gains are subject to tax in Canada. However, effective June 25, Canadians earning over $250,000 in capital gains in a year will see 66.67% of that gain subject to taxation. Accounting firm Grant Thornton estimates that individuals in the top marginal tax bracket could experience an approximately 8% to 9% rise in capital gains taxes due to this change.
Biden’s plan is a bit different — but it’s also targeting high-income investors.
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The figure Cardone shared on X is found in a footnote of a document called “General Explanations of the Administration’s Fiscal Year 2025 Revenue Proposals.”
Biden’s main proposal is to have long-term capital gains and qualified dividends of individuals with taxable income of over $1 million “be taxed at ordinary rates, with 37 percent generally being the highest rate (40.8 percent including the net investment income tax).”
The footnotes detail how this rate could be increased even further.
“A separate proposal would first raise the top ordinary rate to 39.6 percent (43.4 percent including the net investment income tax). An additional proposal would increase the net investment income tax rate by 1.2 percentage points above $400,000, bringing the marginal net investment income tax rate to 5 percent for investment income above the $400,000 threshold. Together, the proposals would increase the top marginal rate on long-term capital gains and qualified dividends to 44.6 percent,” it explains.
Carter vs Reagan again?
Cardone’s reference to “the last guy who tried it” is also quite intriguing.
The last time the capital gains tax approached such a high level in the U.S. was in the late 1970s during President Carter's administration. However, while President Carter subsequently lost the 1980 presidential election, the outcome was likely influenced by multiple factors.
The election occurred during a time of economic challenges, including high inflation and unemployment rates, as well as the Iran hostage crisis. President Reagan's campaign focused on themes of economic revitalization, reduced government regulation, and a more assertive foreign policy, resonating with many voters.
Right now, the election between President Biden and former President Donald Trump still appears to be a tossup. In a recent Marist National poll, respondents were asked to choose between Trump and Biden if the election were held today. The results showed that 48% of voters favored Trump, 51% chose Biden, and 1% remained undecided.
However, a recent Emerson College poll found that 46% of voters supported Trump, 43% supported Biden, and 12% were undecided.
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This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
