(RTTNews) – German stocks fell on Friday as investors reacted to U.S. President Joe Biden’s capital gains tax proposal to fund education and other spending plans in an attempt to overhaul the economy.

The Biden administration is planning to hike the capital gains tax to 39.6 percent from 20 percent for those earning $1 million or more, media reports said.

The administration is expected to release the proposal next week as part of the tax increase to fund social spending in the upcoming “American Families Plan” worth around $1 trillion.

The benchmark DAX was down 46 points, or 0.3 percent, at 15,275 after gaining 0.8 percent the previous day.

Daimler shares rose half a percent. The luxury car maker increased the margin targets for its Mercedes-Benz and Mobility divisions for the year after reporting strong earnings growth in the first quarter.

BMW edged up marginally and Volkswagen shares gained 0.6 percent.

Enterprise solutions company Software AG tumbled 3.4 percent after its first-quarter 2021 results proved to be a mixed bag.

In economic releases, German private sector growth moderated in April with services activity stalling while the upturn in manufacturing production was partly held back by supply shortages, flash survey data from IHS Markit showed.

The composite output index dropped more-than-expected to 56.0 in April from 57.3 in March. The expected score was 56.8.

Business activity across the service sector stalled in April as companies cited the impact of the pandemic and stricter lockdown measures.

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