Report of Hefty Tax Hike Puts Wall Street in Bad Mood

The stock market had a rough day, and the Wall Street Journal blames speculation that President Biden plans to raise the capital gains tax rate. The Dow fell 321 points to 33,815, the S&P 500 fell 38 points to 4,134, and the Nasdaq fell 131 points to 13,818. All the losses were a shade under 1%. Most of the decline came after Bloomberg reported that Biden planned to nearly double the rate to about 40% for wealthy Americans. Another factor: Surging COVID cases worldwide—and in parts of the US, including Michigan—are raising fears that plans to fully reopen the economy will be stalled.

“It wouldn’t take much news for [investors] to start ripping up their reopening playbook,” Christopher Jeffery of Legal & General Investment Management tells the Journal. “The market has gone from a world of not questioning it to starting to question it." The Bloomberg story, meanwhile, says the White House is expected to release details on Biden's tax proposal next week. "We’re still finalizing what the pay-fors look like," said press chief Jen Psaki on Thursday. Because of an existing surtax on investment income, those who earn $1 million or more could wind up with a federal tax rate of 43.4%. (More stock market stories.)