Stocks plummet on report that Biden wants to hike capital gains tax

Stocks slumped Thursday after a report that President Biden will propose almost doubling capital gains taxes on wealthier investors, the third major tax increase the president is eyeing in his first 100 days. The Dow Jones Industrial Average fell 321 points, or nearly 1%, after the Bloomberg News service reported that Mr. Biden wants to raise the rate to 39.6% from the current rate of 20% for people earning $1 million or more. The Nasdaq and S&P 500 indexes also fell nearly 1% each. It was the market’s steepest drop in a month, and stocks had been trading higher before investors learned of the plan. Coupled with an existing surtax on investment income, the capital gains proposal means that federal tax rates for investors could be as high as 43.4%. In high-tax states such as New York and California, the tax rates could rise as high as 52.2% and 56.7%, respectively. It would be the highest rate for the tax since it was introduced 108 years ago. The capital gains tax would add to Mr. Biden’s proposed increase in the corporate rate from 21% to 28% and an income tax hike for individuals earning more than $400,000 annually. The president is looking for ways to pay for part of his $2.3 trillion infrastructure plan, plus another spending proposal that he will announce next week in a prime-time address to a joint session of Congress. His agenda includes $400 billion in subsidies for home health care and child care and $174 billion for electric vehicles...MORE