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Capital-gains tax cut → higher after-tax returns → more incentive to own/risk capital → potentially more demand for stocks → higher equity valuations.
Positive side:
Investors keep more of their gains. If the government taxes less of an investor's stock-market profit, the after-tax return becomes more attractive. That can increase willingness to invest in equities.
It could encourage capital to stay invested. A lower tax burden can reduce the "tax penalty" associated with realizing gains. Investors may perceive equities as more attractive relative to cash or other assets.
The wealth effect could support spending. If stocks rise and investors feel wealthier, they may spend more. Stronger consumption can translate into higher corporate revenues and earnings.
Markets price future earnings, not just today's earnings. If investors believe tax policy will ultimately improve economic growth or corporate profitability, they can bid stocks up before the policy actually takes effect.
President Donald Trump is looking for new policy pledges he can present to voters ahead of the midterm election, according to a top economic aide and a former administration official, including potentially calling on Congress to cut capital gains taxes and create an exemption for certain home sales.
National Economic Council Director Kevin Hassett said Tuesday in a interview with Fox Business host Larry Kudlow that Trump wants to offer voters more incentives to back Republicans in November’s election.
Would this make you change your opinions about him? Is money really enough to make you change your minds and switch over to the dark side?
SPY 800 seems inevitable if this happens as many more investors would flood into the market
Jesus is always with you, believe my child. The stock market is unpredictable, yet behind all the chaos there are patterns and systems that keep everything functioning. If we can recognize intelligence behind complex systems in our everyday lives, why is it unreasonable to believe there could be an intelligent Creator behind the universe itself? Hallelujah 🙏🙌
