Stocks have sharply dropped to a new session low; Bloomberg reports Biden will propose a capital gains tax as high as 43.4% on the wealthy.
U.S. stocks had their biggest slide in five weeks after President Joe Biden was said to propose almost doubling the capital-gains tax for the wealthy. The Dow dropped more than 250 points, or 0.7%, immediately following the report, after trading just slightly lower earlier. The S&P 500 and Nasdaq erased gains to trade at session lows.
Biden’s plan would involve increasing the capital gains tax rate on the wealthy to 39.6%, according to the report from Bloomberg citing people familiar with the matter. This would apply to those earning at least $1 million. The current base capital gains tax rate is 20%.
All major groups in the S&P 500 fell, led by material, energy and tech shares. AT&T Inc. rallied after beating profit estimates. Data showed sales of previously owned U.S. homes slid in March to a seven-month low, while jobless claims posted an unexpected decline last week. “Sticker shock over some of these tax figures will be hard to shake off for some investors,” Edward Moya, senior market analyst at Oanda, wrote in a note. “Some traders are looking for an excuse to lock in profits and they might choose to use this tax story as their catalyst.” Elsewhere, Bitcoin declined for the sixth time in seven days, extending losses after the higher capital gains proposal was revealed. Investors already face a capital-gains tax if they hold the cryptocurrency for more than a year.
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ARTICLE: PAUL MURDOCH
POLITICS EDITOR: CARSON CHOATE
PHOTO CREDITS: BUSINESS – INSIDER