U.S. presidents have little direct control over the stock market, but the markets can and do react dramatically to global events, changes in governmental policies and even presidential elections.
Fair or not, presidents take the credit when markets are up and blame when they’re down.
Read More: 5 Things You Should Stop Wasting Money on if Kamala Harris Wins in November, According to Experts
Check Out: 9 Things You Must Do To Grow Your Wealth in 2024
A recent Washington Post analysis of the Dow Jones Industrial Average and S&P 500 during Joe Biden’s term in office gives the current president big-time bragging rights.
However, at least one hedge fund giant, who made billions working the stock market, worries about what might happen if Biden’s No. 2, Vice President Kamala Harris, earns her own four years in the Oval Office this November.
The Mind Behind a Legendary Short Vows To Exit the Market if Harris Wins
Forbes said John Paulson, founder of Paulson & Co. Inc., is worth $3.9 billion. He made his fortune in the run-up to the Great Recession when he bet against subprime mortgages at the height of the 2007 credit bubble.
Paulson emerged as one of Donald Trump’s most loyal and significant fundraisers, and according to an interview with Fox Business, his fears about market performance during a potential Harris presidency are much of the reason why he’s going all in for Trump.
“I’d be very concerned if Harris is elected and pursues the tax plans and other economic plans that she articulated,” Paulson told interviewer Liz Claman. “I think if Harris was elected, I would pull my money from the market. I’d go into cash, and I’d go into gold, because I think the uncertainty regarding the plans they outlined would create a lot of uncertainty in the markets and likely lower markets.”
Consider This: Trump Wants To Eliminate Income Taxes — Here’s What That Would Mean for the Economy and Your Wallet
Harris Promises To Tax the Rich — And Paulson Is Really, Really Rich
Paulson told Claman that he preferred Trump because the former president wants to extend his 2017 Tax Cuts and Jobs Act, which was the trademark legislative achievement of his first term in office. It’s not hard to understand why.
According to the nonpartisan Center on Budget and Policy Priorities (CBPP), “The 2017 Trump tax law was skewed to the rich.”
The Urban Institute & Brookings Institution Tax Policy Center found that the legislation gave the top 1% of households — like Paulson’s — an average tax cut of more than $60,000 compared to less than $500 for households in the bottom 60%.
The CBPP wrote, “As a share of after-tax income, tax cuts at the top — for both households in the top 1% and the top 5% — are more than triple the total value of the tax cuts received for people with incomes in the bottom 60%.”
Harris, on the other hand, wants to let the 2017 provisions expire — but she wouldn’t stop there.
Billionaires Rely on Capital Gains, Which Harris Has in Her Crosshairs
Paulson also noted that the Vice President wants to raise the corporate tax rate from 21% to 28% and to increase the capital gains rate from 20% to 28%.
But his biggest fear is Harris’ proposal to tax unrealized capital gains on centi-millionaires worth $100 million or more. Paulson and other one-percenters rely on capital gains for a disproportionate percentage of their income, and currently, the IRS taxes long-term gains at a much lower rate than ordinary income — and it doesn’t tax them at all until an investor sells and “realizes” the gains.
So, what does that have to do with market performance?
If Harris succeeds in implementing her plan, Paulson said it “would cause mass selling of almost everything — stocks, bonds, homes, art — I think it would result in a crash in the markets and an immediate, pretty quick recession.”
Editor’s note on election coverage: GOBankingRates is nonpartisan and strives to cover all aspects of the economy objectively and present balanced reports on politically focused finance stories. You can find more coverage of this topic on GOBankingRates.com.
More From GOBankingRates
- 9 Moves For Building Lasting Wealth: What Smart Americans Are Doing Right
- 7 Best New Items To Buy at Dollar Tree Ahead of Halloween 2024
- The Average Consumer Has $6,329 in Credit Card Debt. Here's One Smart Way to Get Out
- 9 Cars To Stay Away From in Retirement
This article originally appeared on GOBankingRates.com: Hedge Fund Billionaire: ‘Very Concerned If Harris Is Elected’ Due To Potential Impact on the Markets
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
