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- Goband’s planned capital-gain tax could put immediate selling pressure on stocks, Goldman Sachs said.
- In a note on Friday, the firm explained that the last capital-gains tax hike in the 201 capital had resulted in the sale of about 100 100 billion worth of shares from wealthy individuals.
- However, those individuals who sold quickly bought back the stock only a few months later, leading Goldm concck to conclude that a home sold around a tax surcharge would be “short-lived and fully offset in the next quarter.”
Biden’s planned capital gains tax hike could put immediate selling pressure on stocks, given what has happened in the markets since the previous rate hike, Goldm Sachs said.
A team of Goldman analysts led by Arjun Menon wrote on Friday that the proposed change in Biden’s corporate tax code would be complemented by an increase in the tax rate on capital gains and dividends for the highest earners.
History has shown that capital gains tax increases are caused by spark stock sales. Since the last increase in capital gains tax rates in 2013, the richest 1% of households have sold 1% of their initial equity and mutual fund assets, valued at about 100 100 billion to date, following the rate hike, Goldm. to not. By 2020, the richest 1% of Americans own 53% of all household shares. Their collective actions can move markets.
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While these sales could be a risk factor for stock allocations in 2020, Goldman said it would not lead to long-term sales or slower economic growth.
In the month following the 2013 rate hike, the top 1% bought back more stock than sold before the change, Goldman said. His decline in stock exposure was only temporary, and Goldman said he believes a similar pattern is likely to occur again.
“We expect home sales around the capital-gain tax rate to have short-term revenue and be fully offset in the subsequent quarters.”
In fact, Goldman predicted that even with the outcome of the “Blue Wave” election in 2021, the richest 1% of Americans would be the biggest driver of total share demand.
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