good afternoon welcome to "power lunch. i'm tyler matheson kelly evans will join me there's reports that president biden will propose a 43% capital gains tax for high income earners. we'll break down the numbers and whether this is in any sense a surprise or whether he is saying it all along we all know the housing market is super hot right now prices are up. who's buying the homes a hint is your new neighbor may not come with two kids and a dog. i don't know what that means but

we'll tell you. plus the yolo economy. not the j.lo economy the pandemic spurring many people to make life changes. "power lunch" will tell you about that and more as we begin right now. kelly? thank you, ty. breaking news, shook the markets in the past hour stocks are sinking now on news of a big hike proposed to the capital gains tax especially for the wealthy. w ylan, what do we know? >> bloomberg reported that the white house is looking at raising the top rate on high income earners to 39.6%. they would then tax capital gains as ordinary income at that higher rate for wealthy households also reporting that the administration would keep in place the net investment income tax which is a 3.8% surcharge on investment income. a lot of this tracks with what

president biden has said already. he talked about it on the campaign trail while running for office and reported them as options that the administration is looking at as they prepare to roll out the american family's plan focused on human capital and that would largely pay for by higher taxes on the wealthy and point out that the net investment tax the 3.8% it already exists it was put in place as a way to raise revenue for the affordable care act, a signature legislative achievements of president obama and would be extremely surprising for the biden administration to get rid of that tax. i did try to reach out to the white house to see if they had any comment on the reports from bloomberg. the white house said not yet and the plans are in flux as president biden prepares to roll this out but the overall size of the plan is expected $1.5 billion according to a source

with $500 billion of tax credits and would be largely paid for. so we'll see where exactly the administration lands on some of these key numbers but a lot of this is part of the campaign platform that got biden elected in the first place. >> stay with us. it is interesting because in the details of the story they say it could raise california's marginal capital gains rate for example over 50% if there was a sense that this was going to come to pass would that -- if people celebrate now, if you have the choice to sell your stocks now versus in the future wouldn't you do it -- you can see the selling pressure now. >> you would want to get ahead of it and perhaps why you see selling today and they can make the date of the tax retroactive to whenever they want. i guess my question here is, how soon might this go into effect is this going to be yet another

tax proposal that is declared dead on arrival in the senate because of republican opposition to it? >> yeah. so a number of things on that. i don't know that they would make it retroactive. they might make it take effect relatively in quick order depending on when this is passed but we have still got a very long road to go and not seen the president's proposal yet this still has to go through the committee process. he is talking about bipartisan notions rather than the sort of fast track reconciliation procedures for the covid relief package so talking to a democratic lawmaker today who met recently with the white house he said that staff was talking about a period of months not talking weeks or days. certainly. so all of this is part of what will go through the sausage grinder on capitol hill and will see where it lands out and senate republicans are dead set against approving anything that

would get rid of what they see as the hard-fought gains in the 2017 tax cuts. >> they may be but it may not be up to them we appreciate it we want do get more market reaction from bob pisani people ponder what it means for the current stock holdings and capital gains is an impact on the economy. >> the argument is this is a small part of the u.s. population that would be affected by this most people have their retirement funds behind tax sheltered accounts and not an issue for capital gains but the company affected by it is very, very influential and what's the concern worth? worth about 50 points in the s&p. we were real close to 2180 -- excuse me, 4180 moving on that issue earlier and down 50 points essentially on the s&p 500 as you can see there sitting right

at the lows for the day. not surprisingly big cap tech stocks if you look at the qqq with very high multiples, they were affected rather quickly by this and that's down 1.5% from the highs and positive actually as that came out and banks we saw a flight to bonds. yields moved down a little bit on that. so banks were affected and sitting near the lows of the day and not particularly dramatic. the trend is clear it is obvious. targeting high income people at this point so first it was the corporate tax. then there was capital gains and now discussing and then this discussion obviously about households and about taxing people who are making above $400,000 at some kind of higher tax rate talking to desks about this in the last hour most people feel the chances of all going through is very, very small or at least the numbers bantered around you

saw from the bloomberg story much smaller still it does cause an initial shock to people's expectations talking about 50% tax rates effectively. >> there's distance between here and there. number one number two, a lot of wriggle room you could reduce the number of people to affect by raising the income at which it would take effect reduce the rate so that it is not the full regular income rate of 39.6 plus the surcharge or whatever it is and there's negotiating to take place but you have a fairly solid block of republicans in the senate saying no to any of it. we'll be talking about this one more thanks as always. for more on a higher capital gains tax let's bring in two guests jack, there's some i guess

confusion here in this room about whether this is something new or something you smart guys all knew about all along what is it >> the "todit is a little of boh we heard of a biden capital gains tax increase on the campaign trail and he did want to align it closer to current income tax to put investing and labor on equal footing when it came to tax rates. but what is new at least in my mind what's new is the original plan was to tax anything a capital gain in excess of a million dollars which is a -- would be a smaller subset of investors versus taxing capital gains or anyone earning more than a million whether you're taking a $10,000 or $10 million capital gain that is different and i think

casting a wider net and that's part of the reason to see the selloff. >> the distinction between an individual or family earns more than a million in adjusted growth income and a capital gain more than a million dollars which would be obviously a fairly small subset for the general population i suppose of that doug, let's get your reaction here is this something that sounds like new news to you or something that you -- i guess we lost doug. jack, i'm coming right back to you. as you look at the tax system, i have -- i don't mean to inject my own opinion here but i will anyway i think there's a strong argument to be made that all income, all income should be treated as income. period and if you did that you would reduce, you could still have a graduated income tax but there

would be no distinctions between capital income and labor income and carried interest income and dividend income and all of that and the result of that would be that you could lower the overall marginal rates significantly true >> you probably could. absolutely if you put everything on the level playing field. and made it simpler you probably could lower the marginal rate. i think the reason why capital gains tax was generally advantaged was because we really do want to encourage entrepreneurship and business formation because that's where the jobs come from so i understand the other side of the argument if you stick your neck out and start a business then any benefit that you ultimately get should maybe be at a better tax rate than, say, sitting at home and clipping coupons on bonds.

>> yeah. doug has rejoined us doug, i was beginning to ask whether this news on a possible biden proposal of raising capital gains for people earning more than a million dollars is new news to you. >> not really. i think this is certainly part of the campaign trail, the democratic agenda. we have heard capital gains, rising estate taxes where they get rid of the stepped up basis which is important to people and certainly higher income taxes so i think it's all of the above. also trial balloons and sort of laying the stakeout for future negotiations so if i want to get something done the first thing i will do is come with a really extreme sort of a request and then negotiate back from that i think that's what -- just the

way politics work and i'm not going to guess to double the capital gains tax because that narrow majority in congress seems too controversial to get it passed but start the framework that taxes are going higher. >> certainly suggests that and that biden, president biden meant what he said that he was going to raise taxes on higher income individuals so quick thought here from doug and then jack can conclude it. over overly -- obviously the market is saying they're selling to get ahead of it. is that smart? >> i think we are up for a digestion period the 200-day moving arch is moving up at 40% that's not sustainable you will see digestion i believe sideways and where main street and the average american and business feels better than wall street but i think both will be smiling i think one thing to point out

is 2022 is the midterm elections. to the extent the economy is humming that narrow majority by democrats may lead to a larger majority and then the tax proposals have a better chance in 2023. >> jack, are today's sellers going to regret it >> i don't know. i think my view is, look, there's plenty of time to plan and respond to any tax or tax proposal that's ultimately in place or potentially becoming law so no. i wouldn't necessarily push the sell button on rumors that doesn't make sense to me the other thing is we should keep in mind there is an exemption or a capital gains tax exemption and it's called qualified opportunity zones. we launched a strategy in 2018 in response to the corporate tax act back then. it was actually a bipartisan portion of the bill so it will

likely stay in place and so anyone interested in taking a capital gain and looking what to do with it i would encourage you to look at qualified opportunity zone investments. >> those were in the prior tax law and a lot of people have taken note of it and thank you for reminding us appreciate it. >> thank you. coming up, more on this market selloff and the impact of a potential capital gains hike and the housing market, whether it is about to be a victim of its own success. have prices climbed so much that no one can afford? key investor says the company is t right track we're back in a couple

ok, at at&t everyone gets our best deals on all smartphones. let me break it down. you got your new customers — they get our best deals. you got your existing customers — they also get our best deals. everyone. gets. the deals. questions? got it. but, why did you use a permanent marker? because i want to make sure you remember. i am going to get a new whiteboard. it's not complicated. only at&t gives new & existing customers the same great deals on all smartphones. get up to $800 off our latest 5g smartphones.

the housing market is so hot, so hot, how hot is it it's turning cold why existing home saling falling in march but because there aren't enough homes to buy let's go to diana olick for the numbers. >> reporter: it is super low supply causing a split in the market sales fell more than expected in march down nearly 4% month to month. the second monthly drop and the slowest sales pace since laynce august supply is down 28% from a year ago and the supply crunch is worst at the lower end of the market so you see sales of houses down

10% from a year ago but between 750,000 and a million up 82% and million dollar plus homes up over 100% that skews the median price to a record high and prices rise at the fastest pace ever builders are trying to get into that entry level but up against high costs for land, lumber and often they can't pencil that lower priced home. we are also now seeing homes sell twice as fast as a year ago. the bidding wars the rule and not the exception. >> diana, thank you. we are also hearing more reports of investors and private equity firms buying up homes. it has become more pronounced post-pandemic? >> reporter: it has a bit. yes. because a lot more demand of people for the single family homes in the suburbs and turn to

rental homes and demand, record high occupancy and investors wanted a safe haven and see real estate as that and seeing more investors get into the market and saw that after the housing crash, 11 million single family rental homes before the crash and now over 16 million and talk about institutional investors, blackstone making invitation homes spinning it into a public company and less than 5% of the market you have a lot of other investors in there mid size, small size investors international investors and the i-buyers, the flippers why it is heating up quite a bit now and that's pushing those lower priced homes up higher. >> there seems to be demand from everywhere fascinating. thank you. if investors are part of the trend scooping up the supply will the housing market become a victim of its own success? too pricey let's bring in real estate ceo

and president mike meedler to me the real estate business is fascinate jared goff there's a story of more agents than there are homes for sale for maybe the first or second time ever so there's a ton of competition to sell these homes. what is that doing to your business >> i have seen that article and the truth of the matter is that it's actually a low barrier of access but to be a professional that takes a lot more study and a lot more professionalism and i think attention to the space but we keep hearing a lot of news how there's just not enough inventory out there right now and that's actually not the real fact just the facts of the matter that you have a lot of properties coming to market and a lot of homes being sold in the country right now and that's really just driven by demand there's so many different

fundamentals for the space that are driving that demand to talk about but the truth of the matter is it's not necessarily an imbalance in the inventory but just the fact that demand is really so off the charts over these last few 12 months. >> basically saying not too little supply but too many buyers that's kind of just stating the problem differently why there's more buyers than we would have thought for the stock of homes in this country. so you guys aren't builders, can't build them but maybe sell the ones that the builders are building but how does this get resolved why is it that there's so many more households and buyers than the current stock of homes >> to look at the just general pace of where we are at right now, year to date we are on pace to sell more homes than not just in 2020 which is tough to say because you had covid numbers in there shut down for the second quarter but even more than 2019,

more than 2018, more than we have in quite sometime and freddie saying 7.1 million homes sold in the country right now but you are right. we've been for decades not building enough inventory specifically as diana said for the first-time home buyer and the good news is that in march as things kind of unfroze you saw that permits, starts and completions are on the rise and hopefully to the point made earlier as other things start to loosen up from the lumber perspective and the laws, labor and lumber and get things moving we'll see even more homes starts in this country to keep pace with the demand that we are seeing driven by just a ton of household formations. >> prices are up but i guess sales are dropping for the number of sales for existing homes. is there anything about the current market that reminds you

of the market in the 2005 which was the peak nationally? anything there that makes you concerned? >> tyler, just to correct you. the pace is month over month dropped but year over year gained. >> right. >> by double digits so the units are there. not just the price which is at hundred straight months in a row and i think that's what people get concerned about is a potential bubble but i don't think there's the same thing where there was call it '06, '07, '08 with 20 months of supply out there on inventory. today as you know we're stricken, one or two months supply and i think that fact that you also got 160 million millennials getting boo the main earning years, starting families, not wanting to live in the parent's basement or the tight condo in the city i think you will see a lot of that

driving continued demand and not maybe at the sprint pace we have been on for a year because of the pandemic but more at a normal pace. >> kelly wants to alexandria ocasio-cortez in another question but as a baby boomer we love the people that come out to the suburbs and pay cash god love you, you millennials! >> great time to sell. >> especially in this area why should we pay 6% for an agent to do homes with the technology coming into the space? >> amazing question. i don't think that most consumers recognize there. literally 180 steps from making that initial offer seeing a property online or on the phone through the date that you close and they might go off market in 20 days, a record as you heard but the truth is your local professional is working their tail off they're a chief cook bottle washer negotiator market knowledge expert and sometimes a

marriage counselor and navigating the parties to bring that dream alive to people in this country. >> marriage counselor. i remember -- yeah it can be an intense process thank you. very good to have you. >> appreciate the time. >> thank you. up next, we are watching stocks near session lows the dow down more than 300 339 now. s&p off about 1% a 1% day on a report that president biden may raise the capital gains tax rates. we are following those headlines, the rates to go up for high income folks. plus, nikola shares are charged up the embattled tesla competitors with plans to build hydrogen fueling centers. those details and more in those details and more in today's "power and your books are set for the month!

...going up against this guy... and pitching your idea 100 times. no, no, no! no. be more successful with payments, payroll, banking and live bookkeeping. labradoodles, cronuts, skorts. (it's a .irt... and shorts) the world is going hybrid. so, why not your cloud? a hybrid cloud with ibm helps bring all your clouds together. that means you can access all your data, modernize without rebuilding, and help keep things both open and secure. that's why businesses from retail to banking are going hybrid with the technology and expertise of ibm.

that building you're trying to buy, - you should ten-x it. - ten-x it? ten-x is the world's largest online commercial real estate exchange. you see it. you want it. you ten-x it. it's that fast. ten-x does the same thing, but with buildings. sweet. oh no, he wasn't... oh, actually... that looks pretty good. see it. want it. ten-x it. yum! bike shop please hold. bike sales are booming. you need to hire. i need indeed. indeed you do. the moment you sponsor a job on indeed you get a shortlist of quality candidates from our resume database. claim your $75 credit when you post your first job at indeed.com/bike.

time now for today's "power movers." nikola putting hydrogen fueling stags at two truck stops but also on cnbc today, jeff

ubben assures investors the company is on track to meet production targets. >> there's tremendous momentum here the team is head down. we'll have trial production in germany in june and will be making, trial production in the third quarter in arizona the new plant we built here. so we're pretty much right on target sleep number falling today. earnings and guidance above expectations but did mention a supply problem it can't get enough foam it seems. kelly? >> did you just come up with that off the top of his head. brilliant ahead markets are plunging on reports of a big hike to the capital gains tax and talking about perhaps my favorite story today, the yolo economy. people loving the jobs as the pandemic winds down and why and what it means with t aop expert, next

if you wake up thinking about the market [ cellphone vibrates ] you'll get proactive alerts for market events before they happen... and insights on every buy and sell decision. with zero-commission online u.s. stock and etf trades. for smarter trading decisions, get decision tech from fidelity.

welcome back i'm rahel solomon. here's the covid update. a texas a&m lab detected a new

strain and concerning because it shows signs of antibody resistance and may cause more severe illness in young people but testing continues. tension among medical workers in greece boiling over a crowd of hospital workers clashed with police. they're demanding more workers as cases and deaths surge. france's prime minister confirming domestic travel restrictions will be lifted may 3rd why bars, restaurants and cultural venues are due to open mid-may. this is the third lockdown that the country undergone over the past year. some good news for superhero lovers, the comic con will be held in person and at a reduced capacity attendance is small ethan the more than 200,000 tickets sold in 2019. tyler, till no word, however, if burning man is returning. >> ah! >> you give me burning man vibes. >> in california >> nevada.

>> nevada. that's right. >> yes lots of fun. i haven't been but i want to go. markets taking a sharp turn lower on the reports that president biden has ideas of increasing the capital gains tax rate for high income people. let's go to dom chu for more on the moves and they are sharp >> they are. where we stand the dow down about 312. the s&p 500 down 33. the intradiaw trading range up 6 at the highs and down roughly 50 points at the lows so the towards lower end of the trading range and the nasdaq up. right around just after the 1:00 eastern time hour on an intraday basis you saw the sharp moves lower on the heels of that report and possibly on the capital gains tax rate and then lower since on a trend basis take a look at the bigst impacted parts of the market it isthe most economically sensitive ones materials down 1.5%.

energy stocks down and about 1% declines for technology the most important sector is heavily weighted in the s&p 500. one other place to look at, three names in particular. the intraday trading of the types of names penn national games, l brands and tesla among the best performing in the s&p 500 over the last year so if people are taking profits because possibly of tax increases down the line look at the biggest gains with profits to be had and taken so they're falling as well and then another thing to watch is what's happening with cryptocurrency. bitcoin off 4% $2,000 per token a lot had to do with the substantiated chatter with regard for proposals of a tax rate on crypto currency profits

and still the prices did take a dive on that and watching that and see if there's a merit to the reports but right now we haven't seen anything with regard to crypto in the proposals. back over to you. >> is bitcoin down about $10,000 in the last -- >> just about, yes the highs just about $62,000 per token. >> so much for stored value. thank you. >> you got it. let's check in with rick santelli at the cme. >> indeed we had the same type of volatility the equities had but dancing in place but haven't mo moved down much. keep in mind we haven't settled under 155 in 6 week just it was yesterday's low looks like we challenge it buying why trying to get ahead of it. a lot of selling

trying to avoid being trapped at the low yields see what i'm saying. the 11th last time closing under 155 and with bund yields even though yields dropped if you look at the far right today and stream five together it blends in same could be said for the euro currency a one week chart is obviously good support here. it has kind of settled back into a range. under 120. look for the selling pressure and then corn, food. for animals or humans zooming up this particular chart is eight years, the last time of these levels and up in chicago today tyler and kelly, back to you. >> that is shocking. corn's in everything corn syrup is in everything a sign of optimism on the

economy. an interesting trend happening is the so-called yolo economy which stands for you only live once workers are considering going out on their own because of the pandemic and the ceo of chipotle spoke to this trend last hour. >> what we are seeing is definitely a little bit more of this dynamic where people are just job switching more aggressively and i think one-time incentives that pop up so what we are focused on is understanding that there are rewards here in the short term and by staying with our company. our company you can come in as a crew member and find yourself running a multi-million dollar restaurant making 60,000, $80,000 in 2 years but you have to get through the first 90 days and so it is much more competitive to retain and develop your people. >> could be fun, ty.

that could -- let's talk to karen kimbro about it. so you have some data to back this up. what are you seeing in terms of willingness and desire to switch industries i don't know if the word is job but doing their own thing right now. >> good to be here we are seeing that people are open to making a change. and that's not unusual during a time of upheaval we had the pandemic. over 20 million jobs lost and people rethinking the strategy and we find that at least 51% of the members that we survey in the u.s. are open to doing something on their own either by setting up a business or maybe switching to a freelance role and the appetite for change is there and what i tell you is that for women in particular industries it's an even more strong desire to strike out on their own path if i didn't mean in finance,

design, health care might be burnt out and looking for opportunities. at a higher percentage looking to make a change. >> doesn't surprise me cnbc right now is running a feature on i think middle-aged millennials but or mid career but the whole idea especially for women childbearing age that they want a job or a -- something to do to fit with the flexibility. out of home and not gone for 12 hours a day and i understand that driving this. so what do you think that means in terms of the with an i to see careers you be fold and new businesses unfold? i'm thinking about productivity in the country more broadly. >> we see that flexibility matters. when we look at members we survey we find out that 50% said hours and location flexibility are among the most important factors for where they want to work and these are more people already employed so for people who are like say freelancing, they are more focused maybe on

motivated by getting transferable skills and definitely matters where you are in the labor market in terms of what motivates you but women pursuing entrepreneurship and striking out to build a firm on our platform and almost i think 2 percentage point increase in women in the share of women entrepreneurs on the platform opposed to pre-covid time so that's a big jump and what i would say it means to give you a deeper thought on this is i think it's a point in time where people are re-evaluating what they want to do and what makes my heart sing? i think it's forcing employers to come back to the negotiating table to say this is to the point of the gentleman from chipotle saying this is what we can offer you and a career path. people are looking for more than having to show up and where and when and looking for opportunities to strike a career path a thing that we have been

encouraging is an idea of building own skills so that people can build the skills toward the job they want. >> to say that the pandemic has presented workers with a moment in time i think is obviously an understatement but there is before and then everything after a sharp break there. i have done a couple events including one chief people officer of microsoft where folks were predicting that as workers come back to work expect massive turnover in the workforce. maybe as high as 30% are you anticipating as companies bring people back that the turnover rate will go way up and do you have a number you would apply to it? >> what i would say is we definitely think it's a moment ripe for change. this is as you said a moment i won't put a number to it but what i will tell you is i think when you have so many things

going on at the same time, you have the administration that's pulling us in a direction towards more sustainable investments, more infrastructure building potentially, that's going to create energy and action and opportunity for people to say where do i want to be in this world of work and at the moment the supply and demand factors are such that we are seeing a healthy growth in jobs and so i think people who are looking for their next play are starting to be a little bit choosy asking people what's holding you back, many people are saying i'm not finding the jobs that fit my criteria that's a big change from eight months ago so i think people are choosier. >> not giving me everything i'd like to have and move on i think employers can feel that, as well. thank you so much. >> thank you for having me. emerging markets under some pressure as covid cases surge in

inyeah, brazil should investors steer clear our traders weigh in on overseas markets, next. what happens when we welcome change? we can make emergency medicine possible at 40,000 feet. instead of burning our past for power, we can harness the energy of the tiny electron. we can create new ways to connect. rethinking how we communicate to be more inclusive than ever. with app, cloud and anywhere workspace solutions, vmware helps companies navigate change. faster. vmware. welcome change.

did you know that petco, is now a health and wellness company? their groomers work wonders for my confidence. i trust their vets, and i'm known to have trust issues. they deliver high quality food the same day. i was outside digging, what'd i miss? just everything regarding our physical, social, and mental health. exciting. i'm gonna take a spin around the room. great idea. ♪ ♪ petco. the health and wellness company.

stay restless with the icon that does the same. the rx crafted by lexus. lease the 2021 rx 350 for $439 a month for 36 months. experience amazing at your lexus dealer.

welcome back to "power lunch. a sobering milestone for india, the country setting a world record in the most covid infections in a single day the prime minister blamed for not prioritizing the vaccine rollout and not allowing pfizer and moderna's vaccines in. this while reemerging from a lockdown too soon letting political campaigning and religious festivals continue despite the surge. brazil another emerging market also grappling with high caseloads. let's talk about this with two guests michael, whether it is india related etfs or the currency markets are responding. >> yeah. look there is a global economic recovery that we all know is happening. it may be a little blip on the radar for these emerging market countries but it is such a global economy right now

we're recommending the clients own between 3% and 5% of emerging markets and may be getting in a bit early but three factors we believe are showing us to invest there one is innovation that's happening forced by the technological adoption of the pandemic these countries had to force the adoption of the technology i also think going through this there's accommodative monetary policies to keep in place for a long time. but we believe that it's got to be active management you have to have boots on the ground in these countries with analysts there living and breathing the economy in those countries so i think, look, may be a bit early to dabble but we would buy the space on weakness and at least have a portion of the allocation of clients' portfolios in em. >> they invest in emerging markets for the growth story but hsbc downgrading for india, brazil what does that mean for the

trade? >> absolutely. growth is paramount looking at e moer emerging economies and with an emerging market conversation is we have to look at the currency markets. right? it is extremely difficult if not possible for emerging economies to advance if they have a depreciating currency. by our work emfx is a first mover, a leader. so if we look at a basket of em currencys we find that the stocks are flat year to state but em currencies are down percentage points. now in the currency world that is a big move. so it kind of keep us on the sidelines here and refrain to take any large move with a depreciating currency and sitting out the trade and will wait for the fx market to start to strengthen before we start to add long positions.

>> yeah. jc and michael, thank you. >> thank you. >> kelly >> thank you. still ahead, a midday selloff on stocks amid reports of an increase in capital gains tax and what i would do to the economy right a lot more on that story and what it would do to the economy right after this break. now the latest from tradingnation.cnbc.com and a word from our sponsor.

welcome back, it is the story that has wropg footed wall street, the report on president biden's apparent plan to increase the capital gain tax rate for high income earners robert frank has more on that. robert, there's some confusion as to whether this was something

that president biden had talked about for a long time on the campaign trail or whether this is catching everybody by surprise what are you finding >> that's right. the confusion relates to this net investment income tax, which is the 3.8% tax that's currently added on top of the 20% capital gains tax. now, throughout the campaign, biden has always said that his goal as part of this phase 2 as well would be to raise the capital gains rate from 20% or 23.8% to 39.6% so everyone was focused on 39.6% as the highest possible capital gains rate what this report now suggests, and we don't know what the white house has decided on this or not, is that the 39.6% would also be added to the 3.8%, which would continue to exist. it wouldn't be repealed. so you add those two together, and you get a top tax rate of 43.4%. now, the tax foundation did some

numbers on this. they find that it would reduce gdp by 0.1% and would actually reduce revenue over time because at a 43.4% rate, you would actually get a decrease in capital gains sales, at least in the longer term and a decrease in revenue so even though 3.8% doesn't sound like a big deal, to investors the capital gains tax is the most important and 3.8% on top of an already expected rate of 39.6% is a big deal, and that's why markets are reacting the way they are. >> it's basically a doubling of the capital gains rate for people earning more than a million dollars in adjusted gross income, right? >> that's right. >> yeah. >> that's absolutely right and again, even knew that this 39.6% rate was possible. now woe're looking at 43.4 you look at new york state or california, you're looking at the mid-50% for california, 56%

california, 52.2% for new yorkers with capital gains tax a lot of wall street looking at this as well. >> it would be, this is a little old data i have from 2015, it would be the highest capital gains rate globally. denmark at 42, france, sweden, 34, uk down at 28% this is an administration that's focused on not having leakage, you know, of investment outside of this country, but if we have the highest capital gains tax in the world, you have to imagine that's what's going to happen. >> absolutely. and kelly, there are some countries like singapore that have zero capital gains rate you look at janet yellen's effort to sort of unify the world's tax rate, and this will just make it harder. some countries don't even have it >> exactly robert, thanks, we'll continue to follow the story as we watch market move lower. they're off the worth levels of the session. dow's down 263 we'll have more in just a moment

when traders tell us how to make thinkorswim even better, we listen. like jack. he wanted a streamlined version he could access anywhere, no download necessary. and kim. she wanted to execute a pre-set trade strategy in seconds. so we gave 'em thinkorswim web. because platforms this innovative,

aren't just made for traders—they're made by them. thinkorswim trading. from td ameritrade. thinkorswim trading. hey lily, i need a new wireless plan for my business, but all my employees need something different. oh, we can help with that. okay, imagine this... your mover, rob, he's on the scene and needs a plan with a mobile hotspot. we cut to downtown, your sales rep lisa has to send some files, asap! so basically i can pick the right plan for each employee... yeah i should've just led with that... with at&t business... you can pick the best plan for each employee and only pay for the features they need.

all right, folks, the story of the hour and this day is the selloff that has hit stocks with the exception there of the russell 2000 which is higher by a little bit in stocks traceable to the idea that president biden may announce in the coming days an increase in the capital gains tax rate to above 43% for earners of more than a million dollars a year in income so stocks are down they are off their lows of the day rather skdecidedly. you can see right there there's the cliff, kelly, where that news began >> that's right, and we can show

the nasdaq now, which was sort of an outperformer in this session. now it's caught up anything that's done well this year, technology, even some materials, some financials, that's where the selling pressure is going to be. >> crypto. >> even bitcoin. >> if it's been up, people sell it now become this comes we'll see what plays out, though thanks, everybody for tuning in to "power lunch" today. "closing bell" starts right now. >> welcome to "closing bell," i'm wilfred frost along with sara eisen today stocks starting the day in a tight range, but taking a sharp turn lower as you can see intraday, just a couple of hours ago. some tax-related headlines out of washington, the major average is in the red as we head into the final hour of trade. let's take a look at what's driving action stocks plummeted after that afternoon report said president biden is considering to hike the capital gains tax to as high as 43.4%. we'll talk more much about that in a moment shares of at&t gettin