What if the Democrats succeed in passing the capital gains tax?

Since Joe Biden’s elections, most observers have been surprised by how Democrats managed to pass significant fiscal policies despite their thin majority. We believe the capital gains tax hike could go ahead regardless of the Republicans opposition. 

The impact of previous tax hikes on markets over the short and long run is not clear. However combined with slowing economic momentum and fears around Fed tightening, this might be a short-term headwind for US equities in Q4 2021.

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