Fra Zerohedge:
The reality of the Biden administration’s ‘soak the rich’ plan is finally hitting markets as the details of his new capital gains tax plan are hitting…
As Bloomberg reports, President Joe Biden will propose almost doubling the capital gains tax rate for wealthy individuals to 39.6%, which, coupled with an existing surtax on investment income, means that federal tax rates for investors could be as high as 43.4%, according to people familiar with the proposal.
The plan would boost the capital gains rate to 39.6% for those earning $1 million or more, an increase from the current base rate of 20%, the people said on the condition of anonymity because the plan is not yet public.
A 3.8% tax on investment income that funds Obamacare would be kept in place, pushing the tax rate on returns on financial assets higher than the top rate on wage and salary income, they said.
The proposal could reverse a long-standing provision of the tax code that taxes returns on investment lower than on labor. Biden campaigned on equalizing the capital gains and income tax rates for wealthy individuals, saying it’s unfair that many of them pay lower rates than middle-class workers.
For $1 million earners in high-tax states, rates on capital gains could be above 50%.
For New Yorkers, the combined state and federal capital gains rate could be as high as 52.22%. For Californians, it could be 56.7%
And investors know the implications… (and for everyone selling now, it’s too late – the tax will be retroactive!)
All the major indices are getting hammered…
As S&P futs tumble into the red…
And The Dow has plunged 250 points…
Treasuries are bid too…
We warned a month ago this was coming…
As Goldman concluded, “the market’s current focus on other macro issues like interest rates also makes it hard to justify trading on uncertain potential future tax hikes.”
That uncertainty just got clearer… and not in a good way.
