Affluent Americans are worried about President Biden’s proposed tax changes on capital gains from stocks, bonds and other assets. But those proposals would hit a sliver of taxpayers, according to a new analysis.

Financial advisers to the wealthy have been fielding calls from anxious clients since the plan was unveiled last week. Many are already deploying a range of tax-reducing strategies in anticipation of the increases, advisers told The Wall Street Journal. But key changes would likely affect only the very wealthy, according to Robert McClelland, a senior fellow at the Tax Policy Center. a joint venture between the Urban Institute and the Brookings Institution.

The Biden plan would increase the top capital-gains tax rate to 43.4% from 23.8% for those earning over $1 million. Capital gains refer to profits on the sale of assets like stocks, homes or small businesses.

Of taxpayers who filed Schedule D, the form for reporting capital gains and losses, only 2.7% had adjusted gross income of $1 million or more in 2018, according to Mr. McClelland’s analysis of Internal Revenue Service data. However, that group of taxpayers accounted for 62% of capital gains, Mr. McClelland said.

“A small amount of people are going to end up paying it, but it could potentially affect a lot of the capital gains,” he said.

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The Biden tax plan would also end a rule that has been a cornerstone of estate planning for generations of wealthy Americans.

Today, people who own assets that have risen in value— Apple Inc. stock, the family beach house, a three-generation manufacturing company—don’t pay capital-gains taxes unless they sell. Under the Biden proposal, those unrealized gains would trigger taxes upon the owner’s death. There would be a $1 million per-person exemption plus existing exclusions for residences.

More than two-thirds of U.S. families have some unrealized capital gains, but most would be covered by the $1 million exemption. Only about 3% of all families have unrealized gains above that threshold, said Mr. McClelland, who also analyzed 2019 Federal Reserve data.

Many of those people will realize gains by drawing on assets like taxable brokerage accounts during their retirement, meaning the share of people who will die with unrealized gains above $1 million is likely even smaller, Mr. McClelland said.

There are skeptics sizing up the White House proposal. At The Wall Street Journal’s CEO Council Summit on Tuesday, Nasdaq Inc. Chief Executive Adena Friedman said she views the effort to increase the capital-gains tax rate on the wealthiest Americans with a cautious eye.

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Taxing investors who are already using posttax dollars in their portfolios creates friction in the markets, she said. “I often think of a capital-gains tax as a second tax. Our view of course is it sounds good to have as low a tax rate as possible.”

Biden’s American Families Plan

Write to Rachel Louise Ensign at [email protected]

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