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Traders work on the floor of the New York Stock Exchange (NYSE) on March 16, 2020 in New York City

  • US stocks sharply reversed Thursday after a report that Biden plans to nearly double the capital gains tax rate.
  • For individuals making more than $1 million, the capital gains tax rate would jump to about 40% from 20%, according to Bloomberg.
  • The Dow Jones fell as much as 409 points after being flat for most of the day.
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US stocks staged a sharp reversal and moved lower in Thursday afternoon trades following a Bloomberg report that President Biden is considering nearly doubling the capital gains tax rate for wealthy Americans.

According to the report, the capital gains tax rate would jump to 39.6% for individuals earnings $1 million or more. The current long-term capital gains tax rate is 20%, regardless of a tax filers’ income levels.

Prior to the report, both the Nasdaq 100 and S&P 500 were trading higher, and the Dow Jones was about flat. All indexes were down by about 1% following the report, with the Dow Jones down by as much as 409 points.

“How do you start a market sell-off? Send a report on raising Taxes,” said Jeff Carbone of Cornerstone Wealth, who is eyeing whether a swath of earnings in the next week will be able to pull stocks back up.

Here’s where US indexes stood at the 4 p.m. ET close on Thursday:

On top of the proposed tax hike, a 3.8% tax on investment income that funds Obamacare would remain in place, pushing the total tax rate on capital gains to as high as 43.4%. Bloomberg cited people familiar with the proposal.

Biden is expected to announce the tax proposal next week, and the increased taxes would fund social spending in the upcoming “American Families Plan,” according to Bloomberg, which is expected to be a $1 trillion spending initiative. Meanwhile, the $2.2 trillion infrastructure plan proposed by Biden would be funded by a proposed corporate tax rate increase to 28%. The current corporate tax rate is 21%.

Initial jobless claims in the US slid to 547,000 last week, according to a report from Labor Department released Thursday morning. The sum landed below the median estimate of 610,000 claims and marks a new pandemic-era low.

West Texas Intermediate crude rose 0.4%, to $61.62 per barrel. Brent crude, oil’s international benchmark, was up 0.34%, to $65.54 per barrel.

Gold fell 0.5%, to $1,783.10 per ounce.