It was a great moment of concern for the Americans as well as the whole world, when President Joe Biden announced plans to almost double the capital gains tax rate for America’s highest earners. Amidst the global pandemic, it is not surprising that tax experts in the EU and the US suggested other governments to squeeze the wealthy.
American citizens who earn more than one million dollars annually go from paying 20% to 39.6 percent and rising to 43.4% if alongside an existing surtax on investment income. This is according to the new plan. Only Ireland has a higher rate of 51% on dividends. The higher rate will only apply to the top 0.3% of US citizens. Those in the UK were disappointed in expecting that the CGT rates would be raised. According to the financial reporter the CGT has received a lot of attention from both the government and the OTS. Many predicted a rise in CGT, which never happened.
The Biden tax plan has two key trends developing in Europe and other established global economies. One is the redistribution of wealth, and the other is to rebalance stimulus support packages. These are to help improve social inequalities, and to increase taxes for super-rich. Questions are being asked on both sides that, whether the gains from capital assets and income needs to be taxed similarly in future or not. Activists are welcoming this shift as the call for greater social equality has always been there.
Tax expat specialists like Tom Griffiths knows well that the US authorities can impose federal taxes on their citizens wherever in the world they choose to reside. This potential knee jerk reaction would come along with consequences. Owning worldwide assets worth over 2 million dollars would be subject to an exit tax. These new tax plans proposed by the American, UK and other Governments means that the wealthiest individuals who have the most to lose will likely crystallize their capital gains sooner. So that they can avoid the rises and benefit from the existing taxation system. President Biden and the US and UK Governments have given many warnings that all should anticipate changes. Tom Griffiths works with clients to structure and streamline taxes for investment, trading entities and owned businesses.