Michael Cardinal, FISM News
Wall Street took a dive on Thursday as reports began circulating that President Joe Biden was planning on doubling the capital gains taxes.
Although the plan is not yet public, sources familiar with the plan said that the capital gains rate would rise to 39.6% for individuals who earn $1 million or more, up from the current rate of 20%. These sources also said the plan will raise the income tax rate from 37% to 39.6%. This will be a part of a $1 trillion American Families Plan, which would provide funding for child care, universal prekindergarten and community college. Press Secretary Jen Psaki said the plan would be discussed in Biden’s address to Congress on Wednesday, but gave no further details.
With news of the plan, the S&P 500 plunged 1% on Thursday, the largest dip in over a month. While the news directly affected the market, it would have had a much larger effect if it was perceived that the tax hike had a chance to pass through Congress. With Democrats holding a slim majority, it is highly unlikely that they would gain enough Republican support to pass such a bloated bill. Thomas Hayes, chairman of Great Hill Capital hedge fund, remarked, “If it had a chance of passing, we’d be down 2,000 points.”
This announcement comes on the heels of the proposed $2.25 trillion American Jobs Plan proposal, which relies on a raised corporate tax, and the $1.9 trillion relief bill that was passed in March. Biden’s plan for funding his outrageous spending habits is to dramatically increase taxation of the wealthy and corporations, without any regard for how this truly affects the economy. Psaki remarked on this ideology in her press conference, saying
His view is that that should be on the backs – that can be on the backs of the wealthiest Americans who can afford it and corporations and businesses who can afford it.”
However, tax hikes on businesses and the wealthy always hurts the working class. The tax increases won’t be shouldered by corporations but will instead directly affect the working class and consumers through higher prices of goods and lost jobs as American companies move their headquarters oversees.
Biden’s first few months in office have been characterized by his willingness to use executive orders to push his agenda and his willingness to spend money at an alarming rate. While he has preached unity and reaching across the aisle, his proposals and executive orders have shown no signs of compromise.