President Biden is reportedly planning to raise taxes on millionaire investors to help overhaul the nation’s economy. The plan, while promoting economic growth, will also help fund childcare, universal pre-K education, and paid leave for workers. Media outlets report he will increase the tax on capital gains to 39.6% for those who earn more than $1 million. Biden is expected to release the proposal next week. After news of the plan hit, stocks slid Thursday afternoon but were little changed Friday.

 

CNBC/Thomas Franck
Biden to propose capital gains tax of 39.6% to fund education and child care, reports say

President Joe Biden will seek to raise taxes on millionaire investors to fund education and other spending priorities as part of the administration’s effort to overhaul the U.S. economy.

As part of the plan, Biden will seek an increase in the tax on capital gains to 39.6% from 20% for those Americans earning more than $1 million, according to multiple outlets, including Bloomberg News and The New York Times.

The capital gains tax is especially important to Wall Street since it dictates how large a chunk of an equity sale is collected by the federal government. The White House declined to comment.

Stocks slid on news about the plan, with the S&P 500 Index down 1% as of 2:14 p.m. after climbing 0.2% earlier. The Dow Jones Industrial Average and Nasdaq Composite both retreated by a similar magnitude.

The proposal would make good on Biden’s campaign promise to require America’s wealthiest households to contribute more as a percentage of their income. This plan would bring the capital gains tax rate and the top individual income tax rate, currently at 37%, to near parity.

Reports said the president is expected to release the proposal formally next week as a way to fund spending in the upcoming American Families Plan, expected to come in around $1 trillion.

Read more about the plan, here.

 

Fox Business/Jonathan Garber
Stocks little changed with capital gains tax hike in focus

Stock futures were little changed Friday morning as investors continued to weigh the impact of President Biden’s expected proposal to hike the capital gains tax rate.

Dow Jones Industrial Average futures were down 13 points, or 0.04%, while S&P 500 and Nasdaq 100 futures were higher by 0.13% and 0.14%, respectively.

The major averages suffered their steepest declines in over a month on Thursday after a Bloomberg News report said Biden was considering a proposal that would raise the capital gains tax to as high as 43.4% for the wealthiest Americans.

In stocks, Intel Corp. CEO Patrick Gelsinger said the global chip shortage that has been causing supply-chain problems for products ranging from electronics to automobiles could last another two years.

Fellow Dow component Honeywell International Inc. raised its full-year outlook amid strong demand for its automation equipment. Both quarterly profit and sales topped analysts’ expectations.

Rounding out the Dow, American Express Co. beat on both the top and bottom line, helped by the release of $1 billion the company set aside to cover potential losses due to COVID-19.

Snap Inc. reported daily active users jumped 22% last quarter to 280 million, exceeding Wall Street estimates. The social-media company forecast a loss of up to $20 million in the current quarter, but also said it could break even.

In commodities, West Texas Intermediate crude oil added 31 cents to $61.74 per barrel and gold jumped $5.20 to $1,787.20 an ounce.

Read more about the overseas market, here.

 

Kitco News/Jim Wyckoff
Gold, silver up as bulls riding the price uptrend

Gold and silver prices are are higher in early U.S. trading Friday, supported by bullish outside markets on this day that include a lower U.S. dollar index and firmer crude oil prices. Bulls are playing the near-term price uptrends in place on the daily bar charts. June gold futures were last up $9.80 at $1,791.90 and May Comex silver was last up $0.12 at $26.30 an ounce.

(Note: Kitco lost a highly valued colleague and dear friend with the passing of Peter Hug this week. They don’t come any better than Peter–kind, humble and caring. RIP, great man.)

Global stock markets were mixed overnight. U.S. stock indexes are pointed toward slightly higher openings when the New York day session begins, on a rebound from selling pressure Thursday afternoon, on news President Biden will propose nearly doubling the capital gains tax rate on the rich to fund programs aimed at more economic equality for all Americans. For those earning $1 million or more, the new top rate, coupled with an existing surtax on investment income, means federal tax rates for wealthy investors could be as high as 43.4%. Republicans slammed the proposal. The U.S. stock indexes have wavered this week amid the conflict of a likely expanding U.S. economy in the months ahead, but with a pandemic that is still seriously impacting much of the world.

In overnight developments, the Eurozone April composite purchasing managers index (PMI) came in at 53.7 versus 53.2 in March, and was above market expectations. A reading above 50.0 suggest growth. The Euro zone manufacturing PMI was 63.3 in the same period.

In other news, Bitcoin has taken it on the chin this week, hitting a six-week low on Friday and trading below $50,000, after trading near $65,000 just a couple weeks ago. The phrase comes to mind, “easy come, easy go.” Also, the gold and silver markets have rallied at the same time Bitcoin has sold off.

Continue reading, here.

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