Will the Proposed Capital Gains Tax Hike Impact Investors?

Will the Proposed Capital Gains Tax Hike Impact Investors?

Graphic of Chief Investment Officer Jim Lowell and the question "will the proposed capital gains tax impact investors?"

On Thursday, April 22, markets abruptly sold off on news that President Biden was considering raising capital gains taxes on investors in the highest tax bracket. Was this knee-jerk response merited? Chief Investment Officer Jim Lowell looked at the potential impact of a capital gains tax hike in our recent webinar,* Inflation, Inoculation and Infrastructure: Defining the New Normal.

Please enjoy the excerpt below and click here for the full webinar replay to hear more. 

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Jim Lowell:

We’ve already seen a reaction to the potential for capital gains tax hikes earlier in the week, but that’s already effectively been washed away. I think investors are going to do the right thing—wait patiently and ensure that they understand what capital gains rate changes may (or may not) actually be before making any investment decision.

Of course, those changes—and capital gains probably aren’t the only one in the Biden administration’s quiver—could be made retrodictive (could include this year’s), so any moves you make now could be null and void before the gains rates are known.

If you look across the history of capital gains rates in the country and the market reaction to them, the good news is that the market effectively adjusts and moves on within a very short-term timeframe (a 12-month time period). We think that this will be yet another instance of that.

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Click here for a replay of Inflation, Inoculation and Infrastructure: Defining the New Normal. Please contact us at (800) 492-6868 to learn more about comprehensive wealth management solutions.

*Webinar recorded after the market closed on Wednesday, April 28, 2021.

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