Yahoo Finance's Jessica Smith breaks down President Biden's reported plan to double capital gains taxes paid by the rich.

Video Transcript

ZACK GUZMAN: Welcome back. Yesterday, we saw a swift sell-off in stocks after we said goodbye to you. News broke, a Bloomberg report, on the prospects of President Biden and the Biden administration potentially floating the idea of doubling the capital gains tax rate for wealthier Americans, in some cases, near 40%. And for more on that, I want to bring on Yahoo Finance's Jessica Smith in Washington, DC to cover what more we know about that potential proposal. Jess.

JESSICA SMITH: Yeah, Zack, we expect to learn details of this plan sometime next week as the president addresses a joint session of Congress. The White House says he's at that point going to detail his plan. But Bloomberg reports that Biden will call on Congress to raise the capital gains tax rate to 39.6% for people making more than one million dollars a year. That would affect less than 1% of Americans, according to Bloomberg. This is a significant hike. Combined with the existing Obamacare surtax, that would bring the rate up to more than 43% for those high earners. And in some states like California and New York, investors would be paying more than 50%.

Now this would help fund the American Families Plan. That's the next piece of President Biden's long-term economic recovery plan. It's focused on childcare, healthcare, and education. The White House was asked about this proposal yesterday. And the Press Secretary did not give any details about the proposal. She says details are still being finalized. But again, we will hear more about that during the joint address. She did go on to say that President Biden is sticking to his promise of not raising taxes on people who make less than $400,000 a year.

Of course, these are ideas that President Biden did campaign on. He campaigned on raising taxes on corporations, on the wealthiest Americans. And we do expect that we might also hear proposals that raise taxes on wealthy Americans. And there could be some changes to the estate tax. So we'll be looking for those details. He is set to address Congress on Wednesday.

And of course, Congress is going to have to get on board with these proposals. These are really just a starting point for negotiations. And it's going to be pretty tough because Democrats have such slim majorities in both the House and Senate. They can't afford to really lose any votes on this. And it's almost a sure thing that Republicans will be united in their opposition. So if this happens, it's not quite clear if it's actually going to be quite this high, if moderate Democrats would actually get on board with that. Zack and Akiko.