Capital Gains

Over the years I have often found it interesting in the two views of the world held by Wall Street and under the Capitol dome. On Thursday and today all my Wall Street contacts were asking about the “leaked” intent of President Biden to raise the capital gains tax rate to the same rate as ordinary income. The Biden proposal would raise the top personal rate from 37% to 39.6%.

First things first, is this news? In his campaign papers last year candidate Biden proposed exactly this idea; how this is news is somewhat a mystery to me. Second, the Bloomberg report was “leaked.” Not sure how one leaks a plank of the platform of a victorious candidate, but someone wanted to start the debate. Leaks are never a good source for decision making. Those who leak have all sorts of motives, and without knowing the viewpoint of the leaker motives are hard to judge.

Politicians and investors live in different universes; interestingly the capital gains story, the lead on Bloomberg, didn’t make page 1 of the Washington Post. The Washington political newsletters I read barely mentioned the capital gains Bloomberg story. In a 50/50 Senate, and expectation that not a single Republican would vote to increase personal tax rates, it is hard to count 50 votes the Democrats...

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