VERY: How concerned investors should be about Biden’s tax proposals.
What effect would these taxes have on stock market behavior? It’s complicated, but Dan Wiener, who runs the Independent Adviser for Vanguard Investors and is chairman of Adviser Investment Management, says the impact on investors from a capital gains hike may be more limited than many think. “The people who will be most concerned are high-end active traders and some hedge funds,” he said. “Much of the stock is with pension funds who have no tax liability; 401(k) and IRA accounts are not taxed until the money is taken out.”
Raising taxes on the wealthy will also revive the old debate that hiking taxes would not necessarily provide a dramatic increase in revenues.
A recent study by the Tax Foundation concluded the Biden tax proposal would raise $3.3 trillion over the next decade, and that raising capital gains taxes would raise only $469.4 billion over the same time period, a fairly small sum of money. Most of the increase would come from raising the corporate income tax rate and the Social Security payroll tax increase.
A separate 2010 study by the Congressional Research Service examined what it called “behavioral responses” to changes in capital gains taxes. The capital gains tax discourages capital gains realizations because capital gains are taxed only when realized. Because of this, “investors may be encouraged to hold suboptimal portfolios or forego investment opportunities with higher pre-tax returns.” In other words, when capital gains taxes are high, investors will likely respond by holding onto stocks rather than selling, which makes the market less efficient.
People will realize lower returns but Washington won’t collect much more money.
DOMINIC GREEN: Joe Biden’s Big Tech takeover.
Joe Biden has said he wants to restore amity and work across the aisle — but that was before the Georgia runoffs gave the Democrats the Senate. Even before the elections, he was softer on Silicon Valley than Trump: where Trump threatened to break up the tech monopolies, Biden took Obama’s line, and said he’d ask them to play nice.
Biden also took more money from Big Tech than any candidate in American history. Donations to the Democrats by Bay Area residents rose from $163 million in 2016 to $199 million in 2020. Bay Area residents gave $800,000 to Trump in 2016, and $22 million in 2020. That says all we need to know about who Silicon Valley thought would give it an easy ride.
Joe Biden has always been a friend to anyone with ready money.
NO MERCY FOR REPUBLICANS: FAA chief vows tough line after some Trump supporters disrupt flights.
You know they’d never do this with Black Lives Matter.
Please, note this exquisite promise from the Pseudodent Select:
[Wall Street Journal] “Don’t dare call them protesters,” Mr. Biden said in remarks from Wilmington, Del. “They were a riotous mob. Insurrectionists. Domestic terrorists. It’s that basic. It’s that simple.”
Mr. Biden blamed President Trump for inciting the violence, saying he had “unleashed an all-out assault on our institutions of democracy.” The White House didn’t immediately respond to a request for comment.
[…] Mr. Biden has said he plans to make a priority of passing a law against domestic terrorism, and he has been urged to create a White House post overseeing the fight against ideologically inspired violent extremists and increasing funding to combat them.
Here, let me translate “they were a riotous mob, and don’t you dare disagree. Stomp stomp stomp. We’re going to make it illegal to have ideas that might inspire people in buffalo head dresses to think they can sit on the Speaker’s chair. Why, it’s lese-majeste. L’etat c’est… you know, the thingy. And don’t you ever think differently, you dog faced pony soldier. Wanna do pushups, fatso?”
h/t SG