That's exactly not what I was saying - I was talking about capital gains which isn't taxed as income. Currently that sits at 15%, but will rise to 25%.
If you assume currently capital gains collections are $150B, increasing them 33% will add $44B.
From a pragmatical pov, that just doesn't seem like much. And that's assuming there's not a contraction in capital gains harvesting, which wouldn't square with history.
Look, I'll admit, I'm not unbiased here. I generate 80% of my income from churning long-term assets.
I sold a company that I bootstrapped a few years ago, and we got a good price.
I'm able to generate about $120k per year after-tax. My goal is to never touch the principal and live off returns.
Now, I'm bootstrapping my next startup... The $120k allows me to work 1 day a week consulting to "plug" the gap between my family's spending and my income. The other 4 days, I work on bootstrapping my startup.
If taxes go up, that will cost me an addl $6700 per year in taxes.
So my choices are...
1) take more consulting work
-> Won't do this because my startup needs my time and I'm already working 60 hr days
2) try to generate higher returns,
-> Not going to do this because I'm already maxed out with the risk I feel comfortable with
3) cut back my personal spending,
-> Yes, this is what will happen.
For the affluent retired, I suspect many of them will choose to cut back too.
From where I'm sitting, the tax policy is going to hit me fairly hard, will only produce an additional $44B in taxes, and will probably cause a recession. So it doesn't seem very wise.
