Stocks fell sharply Thursday following a report that President Biden would propose increasing the capital gains tax for wealthier Americans, making them pay more tax on profits from the sale of investments.
The Dow Jones Industrial Average, S&P 500 and Nasdaq all fell roughly 1 percent each shortly after the report of Biden’s plan to raise the tax for those making over $1 million.
Bloomberg News reported that Biden will call for increasing the capital gains tax to 39.6 percent for those earning $1 million or more, up from its current level of 20 percent. Investors would also be subject to a 3.8 percent tax on capital gains passed through the Affordable Care Act to fund ObamaCare.
Even though Biden had campaigned on raising the capital gains tax and several other taxes on high-earners, news of an imminent proposal turned stocks south after starting the day with solid gains.
