NEW YORK (AP) – After massive U.S. government spending helped send the stock market back to record heights, with even more potentially on the way, the bill may be coming due for the nation’s wealthiest investors.
President Joe Biden is proposing to nearly double the tax rate the highest-earning Americans pay on profits made from stocks and other investments. It would force millionaires to pay similar tax rates on their investment gains as upper-middle class households pay on their salaries, after years of enjoying lower rates.
It’s part of Biden’s efforts to tax wealthy people and corporations to pay for infrastructure investments and programs aimed at helping the broader economy. The most recent proposals, which Biden will detail in a speech before Congress later on Wednesday, focus on lower-income families and children. They include universal preschool for 3 year olds, two years of free community college and the extension of tax cuts for lower- and middle-income families.
Even though the possibility of higher capital-gains tax rates has been telegraphed for a long time, reports of its pending unveiling shook up the stock market, with the S&P 500 falling to a nearly 1% loss on Thursday. Stocks have since set more records, but the kneejerk reaction shows how much investors care about potential changes in tax rates.
WHAT IS THE CAPITAL GAINS TAX?