I’ll just let Barron’s magazine take up the story:
Everything was going fine for the stock market on Thursday—and then an anonymously sourced report hit that detailed how President Joe Biden planned to raise taxes on the wealthy, causing the major indexes to sink into the red. The Dow Jones Industrial Average dropped 321.41 points, or 0.9%, while the S&P 500 fell 0.9%, and the Nasdaq Composite declined 0.9%. The small-cap Russell 2000 had finished the day down 0.3%.
The Biden tax plan will raise the top marginal income tax rate to 39.6 percent from 37 percent, but the real show stopper is his proposal to double the capital gains tax, from 20 percent to 39.6 percent for everyone with income over $1 million.
High earning people generally don’t get that way by being stupid, and the capital gains tax is the most sensitive tax to the tax rate, as it is the one tax that is largely in the control of the payer. Senator Joe Biden once understood this, voting several times in his career to reduce the capital gains tax rate, starting back in the late 1970s and continuing into the Clinton Administration.
The proposed capital gains tax increase probably won’t yield much new revenue, and might even lose revenue. If anyone in the press corps asks Biden or Pspokesperson Psaki the question Charlie Gibson asked Senator Obama in 2008, I’ll be they will get the same answer—it’s not really about revenue, it’s about “fairness,” which is a euphemism for “punish the rich.”
Chaser—This ad is essentially a repeat of the ads Nixon ran in 1968: