![]() Part I provides the general contours of the Build Back Better Act as proposed by President Biden and the significance of President Biden’s capital gains proposals as compared to those in the Tax Reform Act of 1986 (the 1986 Act), under which capital gains and ordinary income were subject to the same rate for the first time in the U.S. This article addresses notable aspects of the 100-year-old history and policy debate about the preferential treatment of capital gains. 1 While the federal tax code has undergone numerous reforms, however, the capital gains preference has weathered the shifting political winds with remarkable durability, perhaps reflecting the fact that it is most readily available to the nation’s wealthiest and most powerful individuals. The capital gains rate increase has been one of the most scrutinized tax proposals in President Biden’s Build Back Better plan, which has been continuously slimmed down in ongoing negotiations from the initial $3.5 trillion price tag over a decade (which, though high, is far less than would be the ten-year cost of the annual military budget just passed by the House and Senate). ![]() Just four years after the enactment of the 2017 Tax Cuts and Job Act, the federal tax system may be on the cusp of yet another major overhaul. In recent years, no single tax issue has been as contentious and divisive as the capital gains preference. This year marks the 100th year since the Revenue Act of 1921 introduced the first preferential rate for capital gains into the U.S.
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