Jim Cramer on Biden's Capital Gains Proposal, Intel

Jim Cramer and Katherine Ross are discussing why Cramer says to not fear the taxman and his thoughts on Intel.
Author:
Updated:
Original:

Jim Cramer is discussing why he says to not fear the taxman when it comes to President Biden's capital gains proposal and his thoughts on Intel  (INTC) - Get Report following his interview with CEO Pat Gelsinger in the video below: 

And after facing earlier pressure, markets are rising in intraday trading despite worries about President Joe Biden's proposed capital gains hike. 

Biden's proposal almost doubles the capital gains tax rate for wealthy individuals to 39.6%, and when coupled with a current surtax on investment income, that means federal tax rates for investors could be as high as 43.4%, Bloomberg reported, citing people familiar with the proposal.

The president's plan would lift the capital gains rate to 39.6% for those earning $1 million or more, an increase from the current base rate of 20%, the sources told Bloomberg.

How's Intel Looking?

"For another "Executive Decision" segment, Cramer checked in Pat Gelsinger, CEO of Intel (INTC) - Get Report. Gelsinger recently took the helm at Intel after a self-described "11-year vacation" from working at the company," TheStreet's Scott Rutt wrote in his Mad Money recap.

"Gelsinger said Intel is focused on execution, leadership products, innovation and rebuilding their culture, four things that have lost their way in recent years. It's only been a short time, he said, but already, they are seeing the Intel engine beginning to restart," he continued.  "When asked about building more chips in the U.S., Gelsinger said it's critical that America reclaim its role as a leading manufacturer of semiconductors. Twenty years ago, America had 37% of the market share for semiconductors. Today, we're down to just 12%. Other governments are investing in technology, Gelsinger added, and we need to invest as well."

Do Not Fear the Taxman

That's Cramer's warning for investors.

"Do we adjust our portfolio now that President Joe Biden is going to propose a huge increase in the capital gains tax for the wealthy? Do we avoid the asset class that had favorable tax treatment and might lose it?" Cramer asked in his Real Money column on Thursday afternoon.

"We know that today's 20% capital gains rate has attracted a great deal of money into the stock market because you can make so much more money on your money than you can on your work. It's a fact of life that the capital gains cuts that President George W. Bush gave us amounted to an immense windfall for wealthy people. It always struck me as odd that you could keep more of the money you make in the stock market than you could keep from your paycheck. But, as my friend and colleague Larry Kudlow argued endlessly on our show, Kudlow & Cramer, the lower tax rate would spur investment by the rich who might otherwise just park their money in something that doesn't generate jobs," he continued.

"I, on the other hand, argued vociferously that Bush should cut the tax on dividends because that would encourage ownership -- not renting -- of stocks and bring more money into the stock market. Larry, who later became Donald Trump's chief economic adviser, and I hammered home these cuts pretty much on every other show. We met with the President and addressed this and ultimately Bush proposed cuts on both capital gains and dividends and he told Larry that we were instrumental in his decision to do so. Larry was proud of his end, and I was proud of mine," Cramer wrote.

Hear what Jim Cramer is only telling members of his Action Alerts PLUS investing club in Friday’s Daily Rundown.