Stocks drop on Biden’s plan to double capital gains tax for wealthy

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Stocks tumbled Thursday on a report that President Biden is mulling a plan to nearly double what wealthy people pay on their investment gains. A Bloomberg News report that Biden wants to raise the capital gains tax to as much as 39.6 percent for people earning at least $1 million chopped 321 points off the Dow Jones Industrial Average, which closed down 0.9 percent to 33,815.90. Before the report hit, major averages were trading higher, buoyed by better-than-expected unemployment data and some positive earnings reports. But the report, which warned of an overall top tax rate of 43.4 percent when combined with an existing 3.8 percent tax on investment income to fund Obamacare, sent the blue-chip Dow benchmark down as much as 420 points at its lowest point. The S&P 500 index ended the day down 0.9 to 4,134.98, while the Nasdaq Composite slid 0.9 percent to 13,818.41. The current top capital gains rate is 20 percent. Experts predict more selling if Biden’s tax plan becomes a reality — potentially ending a bull market that has defied even the devastating economic fallout of coronavirus pandemic, including high unemployment.

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