President Joe Biden’s $7.3 trillion 2025 budget proposal, which would raise the capital gains tax to 44.6% and $5.5 trillion in taxes over the next decade, is aimed squarely at reducing racial wealth inequality, the Treasury Department says.

“Economic suicide” is what Preston Brashers, research fellow for tax policy at the Heritage Foundation, calls raising the cap on capital gains at the federal level from 37% to 44.6%.

Not only would it hike long-term capital gains taxes to rates not seen in a century, it would rob businesses of the capital they need to grow and expand jobs, Brashers tells The Daily Caller.

“Before the tax ever took effect, investors would rush to pull their money out of equities subject to such exorbitant tax rates,” Brashers says. “U.S. businesses would be starved for capital, and business activity would slow to a crawl.

“Ultimately, corporate income and capital gains income would fall off a cliff, so the net result would be less tax revenue, not more,” the tax policy expert continues. “The middle class and working class would be slammed with mass layoffs and lower real wages.”

Targeting Whites

The Treasury’s “2025 Revenue Proposals on Racial Wealth Inequality” report says it is unfair that 92% of long-term stock market investors subject to favorable capital gains taxes are White, whereas only 2% are Black and 3% are Hispanic. Treasury says this is largely why the median wealth among white families in 2022 was $285,000, but just $61,600 for Hispanics and $44,900 for Blacks.

“For generations, entrenched disparities in our society and economy, at times facilitated by the Federal government, have made it harder for Americans of color to have access to opportunity,” Treasury says.

This is why the Biden administration wants to raise the top marginal rate on long-term capital gains and qualified dividends for those making over $400,000 a year to 44.6%.

“Over time, these proposals are expected to increase wealth accumulation by low- and middle-income families and reduce racial wealth gaps,” Treasury says.

The combined federal and state capital gains rate could exceed 50% in many states, according to the Americans for Tax Reform. California residents could be taxed at a 59% rate, while the taxes would range between 53.4% and 55.3% in Minnesota, New Jersey, New York, and Oregon.

The proposal would impose a minimum 25% income tax on unrealized capital gains for those with more than $100 million in wealth. This tax could force many businesses to sell stakes in their company to pay the taxes.

Biden also wants to eliminate the “loophole” that permits families to postpone estate taxes for generations through trusts.

“The wealthy already pay far more than their share, while the tax burden on large corporations ends up landing on individuals across the economy, including low-income individuals,” says Chris Edwards, an economist with the Cato Institute.

Punishing Labor

“Left-wing Biden economists seem unable to appreciate that raising taxes on capital hurts labor,” Edwards says. “Capital and labor work together to produce economic growth. They are complements.

“The Biden economists seem to hold the Marxist view that capital and labor are bitter enemies, and that the only way that labor can win is for government to crush capital,” says Edwards, Cato’s Kilts Family Chair in Fiscal Studies.

“This hints at the false view that sadly underlies much of the Biden administration’s economic policy: high-earners only achieve success through luck, and lower-earners an only achieve success through government handouts,” Edwards says. “That is an appalling, un-American view.”

Biden’s proposed budget was released in conjunction with his administration’s calls to increase spending in fiscal 2025. This would add at least $14.8 trillion to the national debt by the end of Biden’s presumptive second term.

This would be on top of Biden’s $10 trillion in stimulus spending since he took office, bringing the U.S. national debt to $34.5 trillion.

This huge government spending is putting the U.S. economy at risk of stagflation, with first quarter gross domestic product growth of only 1.6%. Inflation as measured by the consumer price index was 4.5% in March year-over-year.