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Does he have a political chance?
While the Democrats have tight control over the House and Senate, which gives them the power to approve tax increases without Republican support, it will require almost unanimous support for the within the party to pass this bill. And there is already some skepticism about the plan - not just from the GOP, but also from Democrats.
A major concern is that increasing rates on capital gains would encourage investors to hold onto their assets. At least that's one of the reasons promoters have used to keep the rate so low over the years. A related argument is that a low rate encourages investment and helps investors keep pace with inflation.
Sen. Bob Menendez, a Democrat from New Jersey who is a member of the Senate Finance Committee, said he was concerned about how rising capital gains might affect "the ability of growth to continue " "
" This is how I judge it, "he said, according to Wall Street Journal . "At the moment, that seems like a pretty high rate to me.
Republicans, as expected, are uniting to oppose the capital gains changes because of their potential impact on the economy.
According to Watson of The Tax Foundation, ultimately the capital gains rate can be increased - but not by up to 39.6%
"If the rate is increased well above 28 to 30%, the government could start to lose revenue as the contributes stop making gains, "he said.
If the plan goes through Congress, it's still unclear when the proposed tax hikes would go into effect - just one unknown among many. As such, financial experts warn that it is indeed too early so that investors are considering selling assets in response.