The S&P 500 Index and the NASDAQ Composite Index fell sharply shortly before the mid-session on Monday after U.S. House Democrats laid out their plans for massive corporate and individual tax rate increases. Meanwhile, the Dow Jones Industrial Average was able to hold onto most of its earlier gains.
At 16:08 GMT, the benchmark S&P 500 Index is trading 4459.33, up 0.75 or +0.02%. This is down from an intraday high of 4492.99.
The blue chip Dow Jones Industrial Average is at 34848.22, up 240.50 or +0.69%. It’s high of the session is 34939.10.
The tech-heavy NASDAQ Composite is trading 15062.85, down 52.64 or -0.35%. This is down from an intraday high of 15215.44.
US House Democrats Propose Hefty Corporate, Personal Tax Hikes
Leading Democrats in the U.S. House of Representatives said on Monday they are seeking to raise the nation’s top tax rate on corporations to 26.5%, up from the current 21%. The proposal also calls for a top individual tax rate of 39.6%. Additionally, the proposal includes a 3% surcharge on individual income above $5 million and a capital gains tax of 25%.
According to Reuters, the powerful House Ways and Means Committee said it will debate legislation this week that would achieve the change as part of Democrats’ broader, $3.5 trillion domestic investment plan.
House Ways and Means Chairman Richard Neal will attempt to win the committee’s approval of the tax changes that are aimed at helping pay for the $3.5 trillion bill to expand social services for the elderly and children and tackle climate change, Reuters reported.
Neal wants to set a graduated corporate tax rate of 18% on annual income below $400,000, 21% on income up to $5 million and 26.5% on income above $5 million.
His proposal also would increase the capital gains tax rate for those with incomes above $400,000 to 25% from the current 20% and include an additional 3% surcharge on taxable income in excess of $5 million.
The House proposal would take huge steps to reverse the 2017 Republican tax cuts. It would take the corporate rate to 26.5%, after the GOP slashed it to 21% from 35%.
S&P, NASDAQ Give Back Earlier Gains while Dow Holds Steady
The Dow Jones Industrial Average gained Monday as the index rebounded from a losing streak. The blue chip average’s bounce comes after the Dow and the S&P posted a fifth straight day of losses Friday, while the NASDAQ Composite registered its third consecutive negative session. For the S&P 500, Friday marked its worst losing streak since February 22.