, Columnist
Capital Gains Tax Hike Would Imperil Active Mutual Funds
Exchange-traded funds would be the most likely destination for fleeing investors.
A capital gains tax increase could be the death blow for actively managed mutual funds.
Photographer: Daniel Acker/Bloomberg
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Actively managed mutual funds have bravely battled the indexing revolution sweeping the financial industry, but President Joe Biden’s proposed capital gains tax increase may be the coup de grace.
Bloomberg News reported on Thursday that the White House wants to raise the federal capital gains tax rate to 43.4% for wealthy individuals, which would be the highest rate ever in the U.S. For those in high-tax states such as New York and California, the combined state and federal rate would be well above 50%.