23 Apr April 23, 2021
Week in Review
Taxes
News came out Thursday that the Biden administration will propose that the capital gains rate for anyone making over $1 million will rise from 20% to the ordinary income marginal rate of 39.6% and that the Obamacare investment income surtax of 3.8% remain in place. Equity markets fell about 1% on the news.
Our Take: A drastic increase in capital gains rates will likely pressure asset prices as buyers demand greater price appreciation in order to achieve the same after-tax returns on their investments.
Municipals
Chicago issued a request for proposals for a casino. Interested developers may submit plans for the location of the casino along with plans for a hotel with up to 500 rooms, restaurants, bars, and meeting space. Bidders will be able to present their proposals to the public later this year and a winner will be chosen next year. The casino is slated to be open by 2025. City leaders estimate that a casino could generate $200 million in revenue and would be used to help fund the city’s fire and police pension funds.
Our Take: Mayor Lori Lightfoot stated that “the bottom line is to make sure we are getting revenue as quickly as possible.” Even if a casino is a good idea, its estimated completion is still years away. While new future tax revenue directed to the underfunded pensions is a net positive, city leaders should focus on more immediate sources of funding, or perhaps pension reform.
All expressions of opinions are subject to change without notice in reaction to shifting market conditions. All information is based on sources deemed reliable, but no warranty or guarantee is made as to its accuracy or completeness. Neither the information nor any opinion expressed herein constitutes a solicitation for the purchase or sale of any securities and should not be relied on as financial advice.