In this edition of The Bull & The Bear, we discuss President Biden’s capital gains tax proposal and what it could mean for the stock market.
It’s a common misnomer that when a Democrat is president of the United States, stock market returns are lower than when a Republican is in office.
Recent data from JPMorgan illustrates that. It tracked the average returns of the S&P 500 from Election Day through the first 100 days of a president being in office.
The results are pretty interesting.
Market Gains Under Biden Strongest Since World War II
The report found that S&P 500 returns under President Joe Biden are nearly 25%, compared to less than 15% under President Donald Trump.
It’s the highest average return of any president in the last 75 years. It’s also more than double the average return of any Republican president since World War II.
However, something on the horizon may hamper those strong returns.
In this episode of The Bull & The Bear, we examine returns and what could halt those gains in their tracks.
The Capital Gains Quagmire
Capital gains are a tax on the profit of investments when individuals and corporations sell those assets.
If you buy a stock and the stock goes higher, when you go to sell the stock, you pay a tax on the gains. But the tax also applies to homes and businesses.
One of Biden’s proposals includes raising the capital gains tax rate from 23.8% to 43.4% for those earning more than $1 million.
Capital Gains Skyrocketed in 2018
While the top-end tax rate for capital gains has remained fairly flat, the amount of those gains hit a record $943 billion in 2018 while taxes collected were $170 billion.
I bring in two of the best investment minds in the game to talk about capital gains and whether Biden’s plan will change the investing landscape.
Chief investment strategist Adam O’Dell and Green Zone Fortunes co-editor Charles Sizemore join me on this weekend edition of The Bull & The Bear. We break down returns and future returns if a capital gains tax increase is implemented.
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If you missed last week’s episode of The Bull & The Bear, Adam, Charles and I discussed inflation and what it means for investors. Check it out here.
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Research Analyst, Money & Markets
Matt Clark is the research analyst for Money & Markets. He’s the host of our podcast, The Bull & The Bear, as well as the Marijuana Market Update. Before joining the team, he spent 25 years as an investigative journalist and editor — covering everything from politics to business.