Will Stocks Fall if Capital Gains Tax Rates are Raised?

By Alexander Yokum

President Joe Biden is considering a hefty increase in capital gains tax rates. Biden's proposal would raise the maximum capital gains rate up to 43.4% from the current rate of 23.8%. This would mark a steep increase and would be the highest level since the 1920's when capital gains income was subject to a maximum rate of 77%.

IHS Markit analyzed the potential impact of this proposal by looking at previous tax rate changes since the 1950's. Key highlights include: a resilient stock market during high and low tax periods and an increase of realized capital gains in periods before taxes are raised. Download the full report

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This article was published by S&P Global Market Intelligence and not by S&P Global Ratings, which is a separately managed division of S&P Global.