Impact of raising capital gains taxes on stocks? History says don't worry about it.

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April 23, 2021

The big story this week?

Talk of raising capital gains taxes

The big story this week is President Biden's expected proposal to raise capital gains taxes for people who earn $1,000,000.00+. Formal announcement expected next week.

My thoughts on this are in the video below.

I want to share with you what I wrote about it on LinkedIn this morning:

Capital gains taxes going up🤷‍♂️?

Stock market going down📉?

We’ll see. But for now, should you, as a saver and investor for your retirement, be worried?

Let’s break this down:

Yesterday, President Biden said he will propose raising the long term capital gains rate for realized profits from stock sales to the highest income tax level for people who earn over one million dollars per year.

😲Is this a surprise? Not really. It was a campaign topic. But it still sent the stock market down yesterday.

✅But over time, even in the short term, stocks have risen in 1 out of the 13 years when personal, corporate, and/or capital gains tax rates were raised.

🤔As controversial as this sounds right now, if you use history as your guide, stocks will march right past this.

✅Plus, most stock holdings are in tax-sheltered accounts like IRA’s & 401(k)’s, so your future/current distributions are already taxed at your personal income tax rate.

❓Overall, do we know for sure if the capital gains tax rates will go up and if so, by how much? No. Should you make any changes to your investments now, based on what you don’t know? I don’t think so.

✅Make those decisions based on your own personal finance situation, not on things you have no control over.

Lol, pardon my use of emoji's. That's social media for you. Anyway, the last point above is key.

The video below is a snippet from my livestream, Be the Boss of Your Money, from January. I'm on the job for my clients. If you have any questions about how changes to current tax rates will impact your personal finance and what you might be able to do to soften the potential blow, all you have to do is call.

Connect with me on your preferred choice of social media platforms for daily personal finance content. Links below.

Thanks for reading and see you next week,

Mitch

How have tax increases affected the stock market?

How do rising tax rates affect the stock market?

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Thanks!

Mitch

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Mitchell O. Goldberg

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President | Investment Professional

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All the views expressed in this report/commentary accurately reflect our personal views about any and all of the subject securities or issuers and no part of our compensation was, is, or will be, directly or indirectly related to the specific recommendations or views we have expressed in this report. This material is not intended as an offer or solicitation for the purchase of sale of any security or other financial instrument. Securities, financial instruments, or strategies mentioned herein may not be suitable for all investors. Any opinions expressed herein are given in good faith, are subject to change without notice, and are only correct as of the stated date of their issue. Prices, values, or income from securities or investments mentioned in this report may fall against your interests, and you may get back less than the amount you invested. The information contained in this report does not constitute advice on the tax consequences of making any particular investment decision. You should consult with your tax adviser regarding your specific situation. Diversification is a method of managing risk and doesn't protect against loss in a down market. The S&P 500 and Dow Jones Industrial Average are indexes. It is not possible to invest directly in an index. *The Dow Jones Industrial Average is a price-weighted index of 30 actively traded blue-chip stocks. **The S&P 500 is a market-cap weighted index composed of the common stocks of 500 leading companies in leading industries of the U.S. economy.

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