Biden gives markets the middle finger

Potential hikes in capital gains cause market selloff [Click to view in browser](. Good afternoon, In a ‘hold my beer’ nod to Elizabeth Warren, President Biden floated an eye popping 39.6% capital gains tax on millionaires to fund education and child care proposals. What wasn’t immediately clear was whether it was marginal on gains over $1 million or on anyone who makes more than $1 million in capital gains. The great debate Capital gains discussions aren’t anything new. It’s a tough pill to swallow for middle income families when they pay a higher tax rate than wealthier folks. Warren Buffett famously said he pays a lower rate than his secretary. But it’s not always that simple. Our tax system is set up so that you pay higher taxes on ordinary income at marginal rates. Let’s say I make $50,000, another person makes $100,000, and the tax rate is 10% on $50,000 and 20% on $50,000 - $100,000. I’d pay $5k in taxes. The other person would pay the same $5k and then 20% on their next $50k or $10k. A lot of people make the mistake of assuming that the other person pays 20% on all $100,000, but they don’t. That doesn’t apply to capital gains. Your capital gains tax rate is entirely driven by your ordinary income, which is derived from your income + capital gains. And your capital gains tax rate is applied uniformly to your capital gains. In short, a capital gain can only push capital gains into higher capital gains tax brackets; it cannot push ordinary income into higher ordinary-income tax brackets. If you don’t understand the nuances don’t worry. That’s for an accountant. All you need to know is that if all you make are capital gains, you still pay taxes, just at a lower rate most likely. Cause and effect 2012 is a great year to compare. Back then, markets knew capital gains rates would increase. What happened? Markets went straight sideways for the remainder of the year and then took off in 2013. Our hot take Don’t expect markets to drive higher with this uncertainty hanging over its head. We’ll see high fliers like tech and Bitcoin start to lose some air. Ultimately, this will give equities a pause it sorely needs. That brings decision-making to the forefront. And there’s no better way to stay informed than reading some great articles from our publishers below Speculation [The Intersection: Crypto and Wall Street This Week]( As bitcoin, ethereum and other cryptocurrencies get increasing attention from investors, Wall Street and its traditional banks continue to adjust to the shift. Catch up on this week's top stories highlighting the intersection of these old guard and new school areas of finance with this recap compiled by The Fly. 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