How much Obama would raise the capital gains rate

Obama's economic proposals in 60 seconds
Obama's economic proposals in 60 seconds

President Obama proposed raising the investment tax rate for high-income households in his State of the Union speech Tuesday evening.

He called for increasing the rates on capital gains and dividends to 28% on high-income households.

The increase would affect couples with incomes over $500,000.

How much of an increase would the rate hike be?

The current long-term capital gains rate is 20% for high-income investors. On top of that, households making more than $200,000 may also be subject to a 3.8% Medicare surtax on some of their investment income.

That makes for a current top rate of 23.8%.

What Obama is doing is proposing an increase in the capital gains rate to 24.2% and then including the 3.8% Medicare surtax for a total top rate of 28%, according to an administration official.

That surtax, which went into effect in 2013, was one of the provisions to help pay for Obamacare.

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