President Donald Trump thrust taxes to the center of the 2020 campaign last week when he said Democratic nominee Joe Biden would raise taxes on “almost all American families” — a claim Biden rebutted, saying his plan calls for increasing taxes for individuals who make more than $400,000 each year.
Despite a potential tax increase, many wealthy Americans have thrown their support behind Biden — whose campaign as of last month led Trump in its number of billionaire donors and amount raised on Wall Street.
In a recent interview, billionaire value investor Mario Gabelli said his taxes “should” go up during this uncertain economic period. But he warned the potential Biden administration against a possible corporate tax hike, saying it would deter businesses from relocating to the U.S.
“My taxes are going up and they should,” Gabelli, the founder and chief executive of investment firm GAMCO, told Yahoo Finance on Aug. 25. “We’ve got to pay for what’s going on.”
“We have an election coming up in the next 70 days,” he says. “Obviously, we have to worry about what's going to happen. What are the taxes? Will capitalism be around?”
Gabelli did not say who he supports in the presidential race. But campaign filings show that he has donated thousands since last year to both Republican and Democratic candidates for Congress, including a $2,500 donation to former CNBC contributor Michelle Caruso-Cabrera, who lost a primary bid against progressive Democratic Queens Congresswoman Alexandria Ocasio-Cortez in June.
In addition, Biden’s plan would raise the top individual tax rate from 37% to 39.6%, according the Tax Policy Center. People with income greater than $1 million could face long-term capital gains rates of up to 39.6%, up from 20%.
Under the tax cut signed into law by Trump, the corporate tax rate fell from 35% to 21%. Biden’s tax proposal would raise the corporate tax rate to 28%, a midway point between current and pre-Trump levels.
If Biden wins, Democrats should keep in mind the adverse economic effects of such a corporate tax hike, Gabelli said.
“What I hope is that they understand that they have to attract companies from outside the United States back to the United States, and the offshoring of logistics should come back,” he says.
“Taxes are an important element of companies relocating to the United States,” he adds.
Gabelli spoke to Yahoo Finance Editor-in-Chief Andy Serwer in an episode of “Influencers with Andy Serwer,” a weekly interview series with leaders in business, politics, and entertainment.
The current Republican margin in the Senate is slim, Gabelli said, noting the possibility of Democrats taking control of the chamber.
“You got three senators to shift the vote. There's 53 Republicans. They only lose three,” he says. “If Biden wins, the vice president will have the breaking vote, and taxes will go up.”
A value investor who rose to prominence in the 1980s on savvy trades in the media and telecom sectors, Gabelli is a longtime admirer of Berkshire Hathaway CEO Warren Buffett and has committed to Buffett’s giving pledge, which requires individuals to dedicate the majority of their wealth to philanthropy.
Investment firms are very cognizant of the tax structures that determine their take-home profits, Gabelli said.
“We are very tax sensitive,” Gabelli says. “It's not only what you make, but it's what you keep in the investment business.”