Investors selling stocks in reaction to the Biden administration’s rumored plan to hike taxes on investments are making a mistake, CNBC’s Jim Cramer said Thursday.
“Please, do not fear the taxman. Don’t fixate on where a stock came from, only think about where it might be going,” the “Mad Money” host said, shrugging off the odds that the proposal would get through Congress as is.
Stocks fell after a Bloomberg News report said that President Joe Biden could propose raising capital gains taxes on millionaires.
Convinced that the situation is creating discounts in the market, Cramer is taking the other side of the trade.
“Be ready to buy stocks that are getting crushed by tax fears that have nothing to do with the fundamentals and watch for stocks with good yields if you’re desperate for tax-efficient income,” he said.
Cramer advised investors to not sell the news, given the hurdles Democrats have to push the policy through a Senate with a slim majority.
“I can live with taxing capital gains as ordinary income – we don’t want higher taxes, but I can live with it – but the idea that Biden has 50 senators who’ll vote for this is just fanciful, frankly,” Cramer said.
As reported, the plan would increase the capital gains tax to 39.6%, up from 20%, for wealthy Americans.
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