Investment taxed at 86% — Biden’s tax plan would kill Wall Street

President Joe Biden has bee♕n touting his “Invest in America” theme across the country. 

He’s right that investm𒆙☂ent in factories, pipelines, research and development, business startups and technology is the seed corn for a growing economy.

Investment is critical 💛to future prosperity and raises American workers’ wages.

The private sector accounts for about 80%ꦡ of all investment in America, and each year private investors put about $4.5 trillion at risk to advance new companies ♏and technologies.

So if it’s investment Biden wants, why doe༺s his new tax plan call for what might be the largest tax penalty on investment i🐓n American history?

If you don’t believe me, let’s walk through the math; the nonpartisan Tax Foundation has verified these 🍷numbers.

Let’s say you’re a multimillionaire who decides to invest $1 million in𓆉 a startup biomedical-research corporation that has🉐 a promising treatment for Parkinson’s.

Remember, this is at-risk caඣpital. An investor is more likely to lose the $1 million than to score the hoped-for big return.

But let’s assume you pick a winner and over 10 y⛄ears have mad꧙e $1 million in paper profits. 

The first thing that happens, before you see any profits, is the firm pays a c🎀orporate tax on them.

Biden wants to raise that to 28% after all allowable exp꧂enses. The company pays $280,000 to the feds, and that $1 million in profits shrinks to $720,000.

Now let’s say you sell the stock. ༺Biden wants to raise the capita𒀰l-gains tax to roughly 44.6% for millionaires from 23.8% today.

He would tax capital gains at the personal-income-tax rate of 39.6% and for millionaires add a 5% “net-investment income tax” on top 🅺of that. 

So you pay rough🅘ly $320,000 in cap-gains tax. Remember, if you lost money on other stocks you own, you’re limited in how much you can deduct from the gain you made on thi🍃s company.

The taxman has set up a 🔜rigged system: Heads you win, so the government gets 42% of your profits; tails you lose all your money.

Adding up the corp📖orate tax and the capital-gains tax on the $1 million profit, your effective tax owed is just a shade over $600,000, or a 60🌞% tax rate.

The tax is roughly similꦺar if you ta⛎ke your profits through dividends or if you hold on to the stock — because Biden wants to tax gains on stock whether you have sold it or not.

But wait. That isn’t really the total tax because, remember, capital gains a꧋re not indexed for inflatio💜n.

Over the last year inflaಌtion hit 6%, but let’s say Biden a🐼nd the Federal Reserve get the inflation rate down to 3% over the next decade.

Over the 10 years you’ve held the stock,♈ your after-inflation return isn’t $1 million, it’s $774,000.

So you are really paying a tax of $600,000 on $774,000 of after-inflation income — fℱor a tax rate of 77%.

This means for eve🧸ry $4 🦩of profits you earned from investing in the company, $3 goes to the tax collector, and you keep $1.

That’s close to confiscatory and even higher than the 70% tax༒ rate Sen. Bernie Sanders has been longing for. Who would invest with a return that low?

Sorry, there is one more set of ta𓆏xes we haven’t yet accounted for.

Let’s say you live in New York or New Jersey. The state corporate tax is above 7% ꦡin these states, and the state capital-gains/dividend tax can exceed 10% after paying federal taxes.

﷽This adds about another꧅ $80,000 to your tax bill, meaning you pay roughly $680,000 in tax on a gain of $774,000.

Congrats:𝓀 You are paying roughly 86% tax on your profits.

How could Wall Street remain the financial capital of the world with tax rates on inves🧸tment approaching 90%?

That’s a bigger tax bite 𓂃than even Sens. Sanders and Elizabeth Warren — the two loudest vo♊ices for radical income redistribution — have endorsed.

My advice to the wealthy: If Biden’s soak-the-rich tax plan ever sees the light of day,൩ you’re a fool to invest. Just buy a yacht and sail away instead.

Stephen Moore is a senior fellow at the Heritage Foundation and a co-founder of the Committee to Unleash Prosperity.