For investors growing concerned that President Joe Biden will move to raise levies on investment gains, CNBC's Jim Cramer on Tuesday offered a strategy to avoid the potentially higher tax geared toward the wealthy.
"If you're worried about Biden's plan to raise taxes on capital gains but not dividend income, well that's not a reason to sell everything," the ", which would end the tax-favored status of capital gains for millionaires, as soon as this week. As reported, the proposal includes hiking the tax to 39.6% from 20%. The rate could hit 43.4% for the richest taxpayers.
"If the capital gains rate goes up to 39.6% and the dividend rate stays the same at 20%, that instantly makes dividend stocks a heck of a lot more attractive," Cramer said. "Biden's plan would create a world where every dollar of dividend income is worth $1.32 of capital gains," he added. "As long as lots of rich investors are worried about this tax hike, you have to expect that the investors who want to pay lower taxes will start swapping into dividend stocks."
MadMoneyOnCNBC jimcramer Better sell ‘em quickly!
MadMoneyOnCNBC jimcramer I'm still trying to figure out how to block Jim Cramer from my feeds.