Stocks dropped Thursday amid reports that the Biden administration will propose a large hike of the capital gains tax in order to pay for his childcare and family spending plan.
The proposal would nearly double the capital gains tax for wealthy individuals from the 20% rate it is at now to 39.6%. Individuals making $1 million or more could end up paying a federal rate of up to 43.4% when an existing Obamacare surtax on investment income is included.
The news, while not yet confirmed, caused stocks to drop the most in over a month, with the S&P 500 down about 0.92% at close. The Dow Jones Industrial Average closed more than 320 points lower, and the NASDAQ was down by about 0.94%.
The possible capital gains tax hike is part of a second spending proposal (after Biden’s $2.3 trillion infrastructure package) and is being billed as the American Families Plan. The plan is