Biden's Proposed Tax Hikes On Corporations And The Wealthy: What Investors Need To Know

President Joe Biden unveiled his new tax plan this week, and investors have been digging into the proposal to determine just how they might be impacted.

What Happened? Biden's new tax plan would increase the top marginal income tax rate for single filers earning more than $400,000 and married couples earning more than $450,000 from 37% to 39.6%.

The plan would also implement a 25% minimum tax on Americans with more than $100 million in wealth.

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In addition, Biden's plan would tax capital gains for Americans earning more than $1 million at the same rate as regular income and close the so-called carried interest loophole.

Biden also proposes quadrupling the 1% tax on stock buybacks that was first implemented in January and raising the corporate tax rate significantly from 7.8% to 28%.

Why It's Important: Pratik Patel, managing director of the BMO Family Office, says the tax hikes on corporations, capital gains and buybacks could have significant implications for investors.

"A rise in the corporate tax rate would negatively affect corporate earnings, although the new tax rate proposed in Biden's plan would still be lower than the rate prior to the 2017 tax cuts," Patel said Friday.

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Patel also said a higher tax on buybacks could have a negative impact on stock prices.

"A tax on stock buybacks could spark short-term volatility in certain stocks that have a history of relying on stock buybacks as a lever to boost share prices," he said.

Benzinga's Take: The SPDR S&P 500 ETF Trust SPY didn't react much to Biden's tax proposals, and likely for good reason. Patel said his tax plan is essentially nothing more than a "wish list," and it is unlikely to be passed by the Republican-controlled House of Representatives.

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