President Joe Biden
AP Photo/Evan Vucci, File
President Biden this week proposed raising the capital gains tax rate to as high as 43.4% for wealthy Americans. The tax hike comes as a part of Biden’s second infrastructure bill, the “American Families Plan.” Experts say the plan is unlikely to pass into law with the proposed rate, but if it does, it could clip the wings of the high-growth tech sector. Sign up here for our daily newsletter, 10 Things Before the Opening Bell.
President Biden shocked the markets this week with a proposal to nearly double the capital gains tax for wealthy Americans.
Biden proposed a 39.6% capital gains tax rate for Americans who earn $1 million or more, sources familiar with the matter told Bloomberg.
The 39.6% tax would be tacked onto the 3.8% Obamacare tax, making capital gains rates as high as 43.4% for top earners.
Biden plans to officially announce his tax plans next week as a way to pay for his second infrastructure spending package, the “American Families Plan.”
The plan will focus on childcare and education programs, spending a reported $1 trillion on “care infrastructure,” but the method in which Biden is set to pay for the plan could hurt markets and especially high-flying tech stocks.
Here’s what 5 experts had to say about what rising capital gains tax rates could mean for investors:
1. “Restrictive US tax policy has never been a positive for capital formation, labor expansion, or capital investment. Unless other Central Banks mandate a similar policy that is enforceable (the Janet Yellen plan), corporations will always seek out lower-cost, tax-efficient jurisdictions.”
“What’s different in this cycle are the Digital Transformation macros such as 5G, Cloud, semiconductor innovation, and the adoption of AI. Corporations may have some more flexibility in offsetting higher corporate rates by “re-platforming” to next-generation technologies and post-Covid hybrid work and collaboration approaches.”
“The potential real impact to Technology share prices may not be higher taxes but runaway inflation which