Thursday’s session ended with a 1% drop in New York indices. Investors may not have liked the proposal to double taxes on capital gains, which is what President Biden’s team is said to be intending to do.
The Joe Biden administration plans to introduce a bill to raise taxes in the United States next week. The highest tax rate pit It is expected to grow from 37% to 39.6%. However, this is nothing compared to the plans to strictly tax capital gains. Earnings in excess of $ 1 million annually are taxed according to general principles – a rate of 39.6%. This means doubling the current rate. It is not known when the new rates will be applied.
In theory, such a step should not be surprising. Exactly such a suggestion is found In the official Democratic electoral program that was unveiled last year. Only on Wall Street hardly anyone believed that Joe Biden would fulfill his pre-election promises. Especially when it comes to raising taxes. However, it appears inevitable, as the Democrat intends to take from the richest (but not the richest) Americans a trillion dollars to spend that money on more social transfers.
So far, we are only talking about unofficial media leaks. However, it is usually an attempt to examine market and media reactions. In addition, the potential tax increase will face a difficult road through a divided Congress with most of the Democrats remaining in the balance.
“If he has a chance to succeed, we are down 2,000 points,” Thomas Hayes of Great Hill Capital hedge fund said. It is not known whether Hayes means the Dow Jones Industrial Average or the S&P 500.
So far, Wall Street has reacted very conservatively. The Dow Jones index fell 0.94% on Thursday, ending the day at 33,815.90 points. The S & P500 index fell 0.92% to 4,134.98 points. The Nasdaq index fell by 0.94% to reach the value of 13,818.41 points.
Meanwhile, on the macroeconomic front, the weekly labor market report was surprisingly positive. The number of applications for unemployment benefits decreased from 586,000 to 547,000, while an increase was expected to 625,000. It is also the lowest number in 13 months, indicating that the US job market is returning to normal, although it may still be with much worse benchmarks than it was before last year’s shutdown.