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    Biden Will Seek Tax Increase on Rich to Fund Child Care and Education

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    The American Family Plan, which the president wants to pay for by increasing the capital gains tax and the top marginal income tax rate, currently doesn’t include an effort to expand health coverage.WASHINGTON — President Biden will seek new taxes on the rich, including a near doubling of the capital gains tax for people earning more than $1 million a year, to pay for the next phase in his $4 trillion plan to reshape the American economy.Mr. Biden will also propose raising the top marginal income tax rate to 39.6 percent from 37 percent, the level it was cut to by President Donald J. Trump’s tax overhaul in 2017. The proposals are in line with Mr. Biden’s campaign promises to raise taxes on the wealthy but not on households earning less than $400,000.The president will lay out the full proposal, which he calls the American Family Plan, next week. It will include about $1.5 trillion in new spending and tax credits meant to fight poverty, reduce child care costs for families, make prekindergarten and community college free to all, and establish a national paid leave program, according to people familiar with the proposal. It is not yet final and could change before next week.The plan will not include an up to $700 billion effort to expand health coverage or reduce government spending on prescription drugs. Officials have decided to instead pursue health care as a separate initiative, a move that sidesteps a fight among liberals on Capitol Hill but that risks upsetting some progressive groups.News of the tax provisions appeared to unnerve investors on Thursday, with stock markets giving up gains as investors absorbed details of Mr. Biden’s capital gains tax plans. The S&P 500 closed down 0.92 percent.The plan will set up a clash with Republicans and test how far Democrats in Congress want to go to rebalance an economy that has disproportionately benefited high-income Americans.Mr. Biden’s advisers are eyeing a wide range of possibilities for how to move the president’s economic agenda through Congress. They are holding out hope of reaching bipartisan agreement on at least some provisions, while preparing to bypass a Republican filibuster and pass much of the tax and spending agenda on a party-line vote using the parliamentary process known as budget reconciliation.The president has broken his economic plan into two parts. The first centers on physical infrastructure, like bridges and airports, along with other provisions such as home care for older and disabled Americans. The second part, details of which emerged on Thursday, focuses on what administration officials call “human infrastructure” — helping Americans gain skills and the flexibility to contribute more at work.The challenges for Mr. Biden are apparent. The administration has already disappointed key Democrats, including Speaker Nancy Pelosi of California. “Lowering health costs and prescription drug prices will be a top priority for House Democrats to be included” in the plan, she said.Republicans have shown some willingness to negotiate with Mr. Biden on the first part of his agenda, including spending on roads, waterways and broadband internet. But they have vowed to fight his tax plans, and they have shown little interest in the spending provisions contained in his latest proposal.Conservative groups criticized Mr. Biden’s plans to raise taxes on high-earning individuals, and Senate Republicans unveiled their own infrastructure proposal to spend $568 billion over five years.That contrasts with the president’s $2.3 trillion American Jobs Plan, which Mr. Biden outlined last month. Republicans cast Mr. Biden’s proposed increases as an attack on their party’s signature economic achievement under Mr. Trump, a sweeping collection of tax cuts passed at the end of 2017.Lawmakers should work together to improve the nation’s infrastructure “without damaging the tax reform that gave us the best economy of my lifetime,” said Senator Patrick J. Toomey of Pennsylvania, the top Republican on the banking committee.The president’s latest proposals call for hundreds of billions of dollars for universal prekindergarten, expanded subsidies for child care, a national paid leave program for workers and free community college tuition for all.A child care center in Queens last month. Mr. Biden’s plan will include about $1.5 trillion in new spending and tax credits, in part to reduce child care costs for families.Kirsten Luce for The New York TimesThe plan also seeks to extend through 2025 an expanded tax credit for parents — which is essentially a monthly payment for most families — that Mr. Biden signed into law last month.Democrats on Capitol Hill have urged Mr. Biden to make that credit permanent. Analysts say the credit would drastically cut child poverty this year. Those pushing Mr. Biden include Senators Michael Bennet of Colorado, Cory Booker of New Jersey and Sherrod Brown of Ohio, along with Representatives Rosa DeLauro of Connecticut, Suzan DelBene of Washington and Ritchie Torres of New York.“Expansion of the child tax credit is the most significant policy to come out of Washington in generations, and Congress has an historic opportunity to provide a lifeline to the middle class and to cut child poverty in half on a permanent basis,” the lawmakers said this week in a joint statement. “No recovery will be complete unless our tax code provides a sustained pathway to economic prosperity for working families and children.”Mr. Biden also wants to incorporate some type of extension for an expanded earned-income tax credit, which was included in the earlier aid package on a one-year basis.The plan’s spending and tax credits will total around $1.5 trillion, according to administration estimates, in keeping with early versions of the two-step agenda first reported last month by The New York Times.To offset that cost, Mr. Biden will propose several tax increases he included in his campaign platform. That starts with raising the top marginal income tax and the tax on capital gains — the proceeds of selling an asset like a stock or a boat — for people earning more than $1 million. The plan would effectively increase the rate they pay on that income to 39.6 percent from 20 percent.Capital gains income would also still be subject to a 3.8 percent surtax that helps fund the Affordable Care Act. It was unclear if the tax increase would also apply to income earned from dividends.The president will also propose eliminating a provision of the tax code that reduces taxes for wealthy heirs when they sell assets they inherit, like art or property, that have gained value over time. And he would raise revenue by increasing enforcement at the Internal Revenue Service to bring in more money from wealthy Americans who evade taxes.Administration officials this week were debating other possible tax increases that could be included in the plan, like capping deductions for wealthy taxpayers or increasing the estate tax on wealthy heirs.Previous versions of Mr. Biden’s plan, circulated inside the White House, called for raising revenues by enacting measures to reduce the cost of prescription drugs bought using government health care programs. That money would have funded a continued expansion of health coverage subsidies for insurance bought through the Affordable Care Act, which were also temporarily expanded by the economic aid bill this year.Mr. Biden’s team was under pressure from Senator Bernie Sanders, independent of Vermont and the chairman of the Budget Committee, to instead focus his health care efforts on a plan to expand Medicare. Mr. Sanders has pushed the administration to lower Medicare’s eligibility age and expand it to cover vision, dental and hearing services.Emily Cochrane More

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    Curtains Up for the One Percent

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    While many Americans were stockpiling toilet paper and Clorox, the rich bought houses, sparking a gold rush in the decorating trades.Rob Satran thinks of it as the Hoshizaki syndrome.Beginning last March, when the world went into lockdown and it became clear that, as Mr. Satran said, “people were not going to be spending their disposable income on normal things,” the trade in high-end appliances abruptly took off.Mr. Satran is a part owner of Royal Green Appliances, a boutique dealership in New York that may be to refrigerators what a Rolls-Royce showroom is to automobiles. “Covid instantly domesticated people,” he said. “They were looking around and thinking about where to invest in their homes.”If, as the adage has it, old appliances are like old friendships — barely functional but too heavy to dispose of — this was the year when homeowners got around to casting a fresh eye on tired refrigerators, balky dishwashers, ranges with pilot lights that stubbornly refuse to ignite.It was the year in which some near the apex of the income pyramid concluded there was no reason to settle for an ordinary ice tray, or even cubes produced by some humdrum domestic appliance, when they could upgrade to a commercial machine capable of cranking out transparent crescents or lucid spheres or gelid top hats like the ones you used to see clinking in glasses at upscale bars. Why not buy a Hoshizaki?“Traditionally, the high-end appliance business is tied to the stock market,” Mr. Satran said, adding that when, by the third quarter of last year, it became clear that the markets weren’t likely to crash, the demand for Wolf ranges, Sub-Zero refrigerators and $4,000 ice machines took off. What followed was a combination of increased demand and supply-chain bottlenecks that produced a backlog felt most acutely by one population of professionals, and that was interior designers.Despite its dire human consequences, the pandemic had the effect in the design trades of sparking a gold rush, a development perhaps more surprising when you consider the fact that in the internet age everyone is a D.I.Y. expert in décor. “Insane is the word,” David Netto, an interior designer in Los Angeles, said of a surge in business noted in interviews with more than a dozen decorators and designers.If at the start of lockdown, Mr. Netto had assumed “brace position,” anticipating a career crash, he now finds himself in the midst of an extraordinary speedup, with far more offers for work than his firm can realistically take on.“I’m a boutique shop, and we never had more than four jobs at a time before,” he said. “Now we have 12.”For Brad Dunning, a designer in West Hollywood who emerged decades ago from the city’s punk rock scene and went on to establish a top-tier practice restoring houses by Modernist heroes like John Lautner and Richard Neutra, fears that a contracted global economy would spell doom for his business turned out to be unfounded.“I was, and still am, completely shocked that people were buying so much real estate and remodeling their houses,,” Mr. Dunning wrote in an email.“I get it that since people were stuck at home, they were focusing on their immediate surroundings,” he continued. “But I still found it odd that when we were all supposed to be wiping down our groceries with disinfecting sprays to avoid death, people were willing to spend gobs of money. Wouldn’t you be saving every penny?”Mr. Romano finds a place for a Regence fauteuil acquired from the estate of the restaurateur Glenn Bernbaum, the owner of Mortimer’s in Manhattan who was once called the “Solomon of bistro seating.”Drew Anthony Smith for The New York Times‘I’ve Never Been Busier’The answer to his question was anything but rhetorical for those Americans to whom a $1,400 government stimulus check was a fiscal lifeline. Yet for the wealthiest, those whom the design elite have traditionally served, the last year produced a home improvement stampede as people transformed their work-life safety bubbles with layers of comfort and convenience increasingly essential to those for whom wine cellars with computerized inventory systems are baseline amenities. Not only were the rich repainting, reupholstering and refreshing their curtains, experts said, they were snapping up houses as casually as ordinary mortals were binge-buying Crocs.“It’s bananas,” Mr. Dunning said. “As long as I’ve been doing this — over 25 years — I’ve never been busier or heard contractors or real estate agents I work with say the same.”When Todd A. Romano, a decorator whose interiors are regularly featured in shelter magazines, left New York in 2016 to return to his hometown, San Antonio, it was to ease the demands of a practice that once required him to commute to Paris from Manhattan on monthly shopping trips and to juggle a roster of clients around the country.“I wanted a more low-key quality of life,” Mr. Romano said. Steadily employed before the pandemic began, Mr. Romano has interior design projects booked through the end of 2022, he said.“It’s not just about rich people feathering their nests,” he said. “I mean, Home Depot is out of building supplies.”The walls of this Texas ranch house are papered in Bird and Thistle from Brunschwig & Fils, and the table is lighted by a piece of French mollusk pottery fitted out as a lamp.Drew Anthony Smith for The New York TimesYet while hoi polloi are shopping for the do-it-yourself flooring and bathroom vanity units that helped drive sales for the home improvement giant to $32.3 billion in the last quarter of 2020 — a 25.1 percent increase over the same period in 2019 — Mr. Romano’s clients are snapping up houses in places like Montecito, Palm Beach and Telluride.“We work for the one-half of the one-half of the one percent,” he said.“Sure, every so often I stop myself in my tracks and say, ‘Sheesh, this is a lot of money,’” he said, referring to things like a $31,000 sectional sofa recently commissioned from a Long Island City workroom for a West Texas ranch or a pair of $8,200 club chairs covered in hand-blocked linen from the fifth-generation French fabric house, Prelle — at a cost of roughly $396 a yard.“But it is also what it costs to do things at this level,” he said of the Olympian expectations of the ultrarich.When the decorator Elaine Griffin, who cut her teeth at firms like that of the architect Peter Marino in Manhattan, returned home to Georgia before the pandemic to establish Elaine Griffin Interior Design while caring for her ailing mother, it was with a modest set of expectations.“Before the pandemic, at client interviews, I was like, ‘Pick me! Pick me! Pick me!’” Ms. Griffin said, speaking from Sea Island, Ga., where she is designing three homes for as many clients new to the coastal barrier islands that rank among the top 10 most prosperous ZIP codes in the United States. “Now I’m like, ‘We have tons of wonderful New Yorkers moving down here, and if I don’t like you …’ Well, I’ll just leave it at that.”It remains unclear whether the pandemic flight from major cities will reverse itself as more Americans are vaccinated. For now, said Victor Long of Banker Real Estate on Saint Simons Island, Ga., the pandemic, a robust stock market, the flight from urban centers to tax-friendly states and what he termed “a major lifestyle reset,” have combined to produce an “a perfect storm’’ in real estate.“Initially, I was grateful for the slowdown, but it never really slowed down here,” the designer Elaine Griffin said of Georgia’s booming coastal islands.Malcolm Jackson for The New York Times“I went from doing $30 million in sales in 2019 to $53 million in 2020,” said Mr. Long, who added that he had already booked $36 million in sales by the beginning of March, 2021.“You always have those people who are struggling to get by on a million a year in New York,’’ Ms. Griffin said. “South of the Mason-Dixon line, the money goes a whole lot further.”She noted that a living room designed by her in 2021 may include a $21,000 sectional sofa, a $12,000 rug, a $6,000 coffee table and a pair of armchairs for $14,0000 and change. “My sweet spot as a Georgia designer,” she said, “is being able to cater to those New York clients because, guess what? New Yorkers are moving down to Sea Island in droves and droves.”It is not just Georgia, of course. “We have tons of people coming down here and buying horse farms, these houses that used to stay in the families of affluent Kentuckians,” said Lee Robinson of the Lee W. Robinson Company, a decorating firm in Louisville. “A lot of the old guard is having to sell, and the new guard represents a new level of wealth because, in my opinion, there has become a greater distance between the haves and the have-nots.”‘Zillionaire Bedlam’By Mr. Robinson’s calculations, to be a have-not in the current landscape of wealth creation is to eke by with a net worth of a mere $10 million. Few, if any, of the 34 clients for whom Mr. Robinson is currently designing houses, fit that description, he said. “The ‘haves’ nowadays are people with a net worth of $100 million plus,” he said. “If you want to see what that looks like, go down to Palm Beach.”In the Palm Beach of today, Maseratis and Lamborghinis are a dime a dozen, according to the designer and writer Steven Stolman. a longtime resident of the 16-mile barrier island. “A convertible Bentley is an entry-level car.”If Palm Beach was once a sleepy winter resort of the moneyed Eastern elite, it is now a kind of “zillionaire bedlam,” Mr. Stolman said. “Beverly Hills by the sea.”One bellwether is the unexpected arrival of a cluster of blue chip New York galleries: Pace, Paula Cooper, Acquavella, Lehmann Maupin, among them. They have established pop-ups and, in some cases, more permanent beachheads that cater to the same deep-pocketed buyers packing restaurants like Le Bilboquet, La Goulue and Sant Ambroeus or cleaning out the shelves at luxury goods purveyors like Brunello Cucinelli, Saint Laurent and Hermès.“At our price point,” Ms. Griffin said of top-tier professionals like herself, “these are second or third or fourth houses.”Malcolm Jackson for The New York TimesReal estate agents in Palm Beach have found themselves complaining about the paucity of inventory, with bidding wars now common and many homes being brokered and sold off-market before they can even be listed.“We have absolutely nothing,” said Liza Pulitzer, a realtor with Brown Harris Stevens. In over a quarter-century of selling property in Palm Beach, Ms. Pulitzer, a third-generation resident (her mother was the beloved socialite and designer Lilly Pulitzer), said she had never encountered anything resembling the frenzied market of the last 12 months.“Typically, we would see 180 or 190 houses,” for sale at any given time, Ms. Pulitzer said. “Right now on the entire island there are 42 houses.’’ Of those, 24 are “modestly” priced below $20 million; the other 20 range as high as $120 million. “Everything revolves around the real-estate boom,” she said. “Gallerists are insanely busy. Contractors are insanely busy. There isn’t a decorator I know that isn’t maxed out.”So, too, are appliances dealers hawking luxurious necessities like this year’s must-have range, the La Grande Cuisine 2000 from L’Atelier Paris. With six brass gas burners, a grooved electric griddle, two ovens and a central storage cabinet encased in a matte blue frame ornamented with copper trim, it comes with trademark fleur-de-lis appliqués on the doors and a price tag of almost $40,000.“I hear the lead time is a year,” Mr. Stolman said of the coveted ranges. (Contacted by a reporter, a representative from L’Atelier Paris placed the wait at closer to three months.)“If there are two things the rich hate, it’s to wait or to be told no,” Mr. Stolman said.Yet wait they must. “I used to tell people that on the back of my card it says, in very fine print, “It gets here when it gets here,”’ said Paul Vincent Wiseman, doyen of designers to the California Bay Area elite. “I’ve dealt with the very, very rich all my career,” said Mr. Wiseman, whose company recently added four new hires to its 40-person work force and, he said, recorded its most profitable month in 41 years in October when there was still no end to the lockdown in sight.“It’s obvious that people are a lot wealthier than they were even two years ago, but they’re also focusing inward a little more,” he said. “We all looked around and suddenly realized our homes needed help. It’s what I call the ‘What a dump’ syndrome.” More

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    Warren Revives Wealth Tax, Citing Pandemic Inequalities

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    #masthead-section-label, #masthead-bar-one { display: none }The Coronavirus OutbreakliveLatest UpdatesMaps and CasesRisk Near YouVaccine RolloutNew Variants TrackerAdvertisementContinue reading the main storySupported byContinue reading the main storyWarren Revives Wealth Tax, Citing Pandemic InequalitiesA tax on the net worth of America’s wealthiest individuals remains popular with voters, but has yet to be embraced by President Biden.Senator Elizabeth Warren plans to introduce legislation Monday that would apply a 2 percent tax to individual net worth above $50 million, and an additional 1 percent surcharge above $1 billion.Credit…Anna Moneymaker for The New York TimesMarch 1, 2021Updated 3:49 p.m. ETWASHINGTON — Senator Elizabeth Warren, Democrat of Massachusetts, introduced legislation on Monday that would tax the net worth of the wealthiest people in America, a proposal aimed at persuading President Biden and other Democrats to fund sweeping new federal spending programs by taxing the richest Americans.Ms. Warren’s wealth tax would apply a 2 percent tax to individual net worth — including the value of stocks, houses, boats and anything else a person owns, after subtracting out any debts — above $50 million. It would add an additional 1 percent surcharge for net worth above $1 billion. It is co-sponsored in the House by two Democratic representatives, Pramila Jayapal of Washington, who leads the Congressional Progressive Caucus, and Brendan F. Boyle of Pennsylvania, a moderate.The proposal, which mirrors the plan Ms. Warren unveiled while seeking the 2020 presidential nomination, is not among the top revenue-raisers that Democratic leaders are considering to help offset Mr. Biden’s campaign proposals to spend trillions of dollars on infrastructure, education, child care, clean energy deployment, health care and other domestic initiatives. Unlike Ms. Warren, Mr. Biden pointedly did not endorse a wealth tax in the 2020 Democratic presidential primaries.But Ms. Warren is pushing colleagues to pursue such a plan, which has gained popularity with the public as the richest Americans reap huge gains while 10 million Americans remain out of work as a result of the pandemic.Polls have consistently shown Ms. Warren’s proposal winning the support of more than three in five Americans, including a majority of Republican voters.“A wealth tax is popular among voters on both sides for good reason: because they understand the system is rigged to benefit the wealthy and large corporations,” Ms. Warren said. “As Congress develops additional plans to help our economy, the wealth tax should be at the top of the list to help pay for these plans because of the huge amounts of revenue it would generate.”She said she was confident that “lawmakers will catch up to the overwhelming majority of Americans who are demanding more fairness, more change, and who believe it’s time for a wealth tax.”The Coronavirus Outbreak More

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    Who Owns Stocks? Explaining the Rise in Inequality During the Pandemic

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    #masthead-section-label, #masthead-bar-one { display: none }The Coronavirus OutbreakliveLatest UpdatesMaps and CasesVaccine InformationTimelineWuhan, One Year LaterAdvertisementContinue reading the main storyUpshotSupported byContinue reading the main storyWho Owns Stocks? Explaining the Rise in Inequality During the PandemicBad economies usually hurt both workers and investors. Only the first part has been true this time.Jan. 26, 2021, 5:00 a.m. ETLast year featured a devastating public health crisis, an imploding job market, a heavy dose of political tumult and — surprisingly — a roaring stock market.Add it all up, and a major consequence was an expansion of inequality in a nation where economic disparity was already on the rise.It boils down to which groups were hurt most by the sinking parts of the economy and which ones benefited most from the rising share prices.In the brick-and-mortar part of the economy, lower-wage workers were disproportionately affected by the job losses. At the same time, Americans benefited from gains in share prices: both people who own individual stocks in brokerage accounts and those who own stocks in personal retirement accounts, like mutual fund IRAs, or in those offered by employers, such as 401(k)s.Yet that’s where even more disparity kicked in, an analysis of data from the Federal Reserve’s 2019 Survey of Consumer Finances shows. Although the distribution of income is unequal in the United States, ownership of financial assets in general and stocks in particular is even more so.
    [embedded content]The survey, conducted every three years, collects exhaustively detailed financial information from a sample of American “economic units” — we’ll call them families — including income, the types of assets they own and what those assets are worth.An analysis of this data shows that in 2019, the top 1 percent of Americans in wealth controlled about 38 percent of the value of financial accounts holding stocks. Widen the focus to include the top 10 percent, and you’ve found 84 percent of all of Wall Street portfolios’ value.Using the broadest definition of Wall Street involvement, which includes everything from workplace 401(k)s to mutual funds, just over half of American families have at least one financial account tied to the market, while just one in six report direct ownership of stock shares. Wealthier people are far more likely to have these accounts than middle-class families, who in turn are far more likely to be in the market than working-class or poor families.And the wealthy, not surprisingly, are more likely to have larger portfolios.A paper-napkin calculation that assumes all market participants averaged last year’s 16 percent gain in the S&P 500 would mean that American families fattened their portfolios by $4 trillion over all last year. But $3.4 trillion of that would have gone to just 10 percent of families, leaving the other 90 percent to split $600 billion.Beyond the gap in holdings between the very rich and the merely affluent, there is also a gap between the affluent and the middle class. Only half of households in the 40th-to-49th percentiles of net worth have any brokerage or retirement accounts that include stocks. But among households in the 80th-to-89th percentiles, 84 percent are invested in at least one holding.Wealth and the Role of Stock PricesWhen the market surged last year, wealthier families benefited more. Not only do they have larger portfolios than middle-class and poorer investors, but they also are far more likely to be invested in the market in the first place.Percent of families with investments by net worth percentile:
    [embedded content] Poorest group includes unsuccessful or highly leveraged investors with low net worth.Source: The New York TimesMoreover, the median portfolio size for households in that middle group was $13,000 in 2019, and so would have gained about $2,000 in last year’s market. The typical family in the wealthier group had $170,000 in the market and would have gained about $27,000 with a similar portfolio.These wealth differences are far starker than the inequality we usually talk about on the income ladder.The Coronavirus Outbreak More

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    What Giant Skeletons and Puppy Shortages Told Us About the 2020 Economy

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    @media (pointer: coarse) { .at-home-nav__outerContainer { overflow-x: scroll; -webkit-overflow-scrolling: touch; } } .at-home-nav__outerContainer { position: relative; display: flex; align-items: center; /* Fixes IE */ overflow-x: auto; box-shadow: -6px 0 white, 6px 0 white, 1px 3px 6px rgba(0, 0, 0, 0.15); padding: 10px 1.25em 10px; transition: all 250ms; margin-bottom: 20px; -ms-overflow-style: none; /* IE 10+ */ […] More