A White House spokesman declined to comment on Thursday’s (April 22) stock market decline caused by news that President Joe Biden is preparing to sharply raise taxes on capital gains and other taxes on the wealthy.
On Friday (23), reporters asked White House spokeswoman Jen Psaki at a news conference whether the Biden administration was concerned about investors’ apparent lack of support for the proposed tax hike on the wealthy. Psaki declined to answer the question.
“I’ve been in this business (as spokeswoman) for a long time, and I don’t comment on stock market trends.” She said, “But I do see the data, and in fact, the stock market is up again this morning.”
Bloomberg and the New York Times, citing sources, reported earlier that Biden’s proposed proposal calls for raising the top marginal income tax rate from 37 percent to 39.6 percent, and proposes to nearly double the capital gains tax rate for those earning more than $1 million, from 20 percent to 39.6 percent, in order to fill the gap it gives to child care, universal pre-kindergarten and labor. The proposal would also nearly double the capital gains tax rate for those earning more than $1 million, from 20 percent to 39.6 percent, to cover the approximately $1 trillion needed to fund major investment programs such as child care, universal preschool and paid leave for workers. When combined with the 3.8 percent investment income tax rate that funds “ObamaCare,” the U.S. investment income tax will rise to 43.4 percent.
Media reports caused the U.S. stock market to reverse its gains on Thursday and weakened sharply. Stocks closed Thursday’s trading session down about 1 percent.
Stocks trended back to recover lost ground Friday afternoon as analysts predicted that any such tax hikes could be diluted and scaled back before Congress passes them.
In an analysis sent to clients, Goldman Sachs economists said, “We expect Congress to pass a trimmed-down version of the tax hike. We expect Congress to agree on a more modest tax increase, probably around 28 percent.”
Biden’s tax hike plan is consistent with his 2020 presidential campaign platform, the paper said, and he proposed then to raise taxes on corporations and the wealthiest Americans when he took office. But he has also repeatedly promised not to raise taxes on people earning less than $400,000 a year.
CNBC reports that the White House has reacted with indifference to stock volatility, in contrast to former President Donald Trump’s (Trump) administration. During Trump’s tenure, the U.S. stock market set several historical records, and Trump has often cited market returns as an indicator of successful government governance, arguing that the stock market is tied to the U.S. economy, Americans’ pension funds and more.
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