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April 22 (UPI) — U.S. stocks gave up early gains Thursday after reports that President Joe Biden is set to introduce an increased capital gains tax for wealthy Americans.

The Dow Jones Industrial Average fell 321.41 points, or 0.94%, while the S&P 500 dropped 0.91% and the Nasdaq Composite closed down 0.98% following the news.


So-called growth stocks suffered as a result of the report as Tesla stock fell 3.28% and Amazon declined 1.58%.

Bloomberg and The New York Times reported that Biden was planning to hike the capital gains rate to 39.6% for those earning $1 million or more, up from the current base rate of 20%, citing people familiar with the matter. Combined with an existing surtax on investment income, wealthy investors could face federal tax rates as high as 43.4%.

The tax is expected to be introduced as part of Biden’s American Family Plan, with the funds used to support education and child care initiatives.

White House press secretary Jen Psaki said the White House was still “finalizing what the pay-fors look like” when asked about the capital gains tax plan during a Thursday press breifing.

“Biden’s proposal effectively doubles the capital gains tax rate on $1 million income earners,” Jack Ablin, Cresset Capital Management’s founding partner and CIO told CNBC. “That’s a sizable cost increase to long-term investors. Expect selling this year if investors sense the proposal has a chance of becoming law next year.”