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A policy group this week warned that the U.S. Department of Treasury’s proposed budget could significant increase taxes for certain Americans.

A policy group this week warned that the U.S. Department of Treasury’s proposed budget could significant increase taxes for certain Americans, namely those paying capital gains taxes.

The budget called for a record high 44.6 percent capital gains tax rate, which some have noted would be the highest rate proposed since the tax was created in the 1920s.

“The rate disparity between taxes on capital gains and qualified dividends on the one hand, and taxes on labor income on the other, also encourages economically wasteful efforts to convert labor income into capital income as a tax avoidance strategy,” President Joe Biden’s proposed budget said.

But after it was proposed, the Americans for Tax Reform, described as a conservative-leaning group that seeks lower taxes, said the plan could be disastrous for the U.S. economy, which has already been struggling with high inflation and interest rates.

“President Biden has formally proposed the highest top capital gains tax in over 100 years,” John Kartch, with Americans for Tax Reform, wrote in a policy paper earlier this week. “Biden’s 2025 budget calls for about $5 trillion in tax increases over the next decade.”

Mr. Kartch warned that “under the Biden proposal, the combined federal-state capital gains tax exceeds 50 percent in many states, including California, New Jersey, Oregon, New York, and Minnesota. California, notably, would have a 59 percent capital gains tax rate when factoring in the proposed Biden tax plan, his group found.

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“Worse, capital gains are not indexed to inflation. So Americans already get stuck paying tax on some ‘gains’ that are not real,” he warned. “It is a tax on inflation, something created by Washington and then taxed by Washington. Biden’s high inflation makes this especially painful.”

It came as President Biden this week suggested that significant portions of the Trump-era Tax Cuts and Jobs Act expire next year if he wins reelection, meaning that a number of Americans could face larger tax bills.

“Donald Trump was very proud of his $2 trillion tax cut that overwhelmingly benefited the wealthy and biggest corporations and exploded the federal debt,” the president wrote on social media Tuesday. “That tax cut is going to expire. If I’m reelected, it’s going to stay expired.”

In 2017, President Donald Trump signed the measure that dramatically overhauled the U.S. tax code, reducing the top individual income tax bracket from 39.6 percent to 37 percent. Changes under the law to the individual income tax are slated to end in 2025.

Other analysts say that if it expires in full, a large number of Americans will see their tax payments increase.

“If lawmakers allow full expiration to occur, most Americans will see their personal tax bills rise and incentives for working and investing worsen,” Erica York, senior economist and research director at the Tax Foundation, told Fox News.

The Tax Foundation has said that a person making $30,000 each year would see their taxes rise about $253.75 on average in 2026, while a married couple with two children who make $165,000 would have to pay about $2,450.50 more.

“Though lawmakers may not address the looming expirations this year, they should prepare for the upcoming expiration by weighing the trade-offs of each change the 2017 tax law made,” Ms. York said. “Lawmakers should cement into law a tax code that promotes growth and opportunity without worsening U.S. debt.”

But White House officials said that if President Biden is reelected in November, the tax cuts would be extended for people making less than $400,000 per year. They claimed that the Trump-backed tax cuts measure would cause a raise in taxes for middle-class Americans next year.

“His budget would further cut taxes for the middle class and working families,” a White House spokesperson told news outlets this week. “He has said that repeatedly and in every budget. Trump and Republicans are responsible for the egregious and fiscally reckless cliff that is in the Trump Tax Cuts—they are the reason taxes will raise for the middle class after 2025.”

After taking control of the House last year, Republicans introduced a measure to make the Tax Cuts and Jobs Act’s capital gains and individual provisions permanent.

“We need to provide some much-needed relief and certainty to hardworking families and Main Street businesses and ensure these tax cuts do not expire,” Rep. Vern Buchanan (R-Fla.), who sponsored the measure, said last year when it was introduced.