Biden’s plan to raise capital-gains taxes on the rich is good politics but bad economics

The leak about the second phase of proposed tax increases concerning capital gains pushed the investor community into a frenzy.

While the details of the proposal are not yet known, it looks like the administration is planning to tax capital gains at regular income tax levels for individuals with incomes above $1 million, pushing the top rate on capital gains from 23.8% (including investment surtax of 3.8%) all the way up to 43.4% (a higher marginal income tax rate of 39.6% plus the 3.8% surcharge).

If so, there is no...