There's a fundamental misunderstanding between tax policy and the stock market's direction. We keep thinking that it's incredibly odd that the stock market could romp during President Biden's first 100 days given how he is attempting to raise taxes pretty meaningfully for the rich, the millionaires and above, and therefore the stock market has to go down.
The first misunderstanding? The owners of stock. We know that probably about 55% of stock is indexed and an index owner is not a renter. We have tens of millions of people who own stock, but they own it until they can't, until they have to take distributions. Even then, amazingly, we have not seen the pressure, the natural pressure from retiring baby boomers. They just don't seem to be sellers, and the ones who have turned 72, when you are supposed to pull out money, haven't hurt the market on their exit. If you didn't know better, they take the money out and put it back, perhaps in a plain old non-tax advantaged account.
Second, what the heck else is there to do with the money? Normally you would expect rich people to go into muni bonds, but they aren't giving you much of a return despite the lack of taxes. A better bet, for the last decade? Companies that pay big dividends which will be taxed at a much lower rate than capital gains. I'd rather own Chevron (CVX) than just about any other asset because of its consistent dividend. Same with Caterpillar (CAT) . There are plenty of stocks with possible price appreciation that pay a great rate.
Third, grousing isn't the same as selling. Rich people don't want to pay taxes, and perhaps the best way to do that is to not sell. The higher rates actually discourage selling especially because we don't know if the new rates will be retroactive.
Will rich people take money out to buy boats or country houses or expensive cars and more expensive vacations? Yes, but rich people per se make a lot of money and will still make a lot of money. They just won't have as much left in cash.
Finally, rich people like to make money with their money. As someone who advised some of the richest people in the world, their first instinct is to find good stocks -- yes, stock pick -- and then make big bets. I always tried to talk people out of stock picking and suggested they own municipal bonds because you only need to get rich once and I didn't want them to get poor again. But they typically couldn't resist. Lots of them followed the premier investor of our day, Warren Buffett, who is throwing his annual meeting this weekend. Buffett believes in progress, and the way to cash in on progress is to buy, not sell, stocks.
My suggestion: stop trying to relate taxes to stock behavior. There is nothing the president is doing with taxes that should hurt stocks. If anything, it should help them as natural sellers who used the stock market as a tax-advantaged piggy bank worth breaking open endlessly will go away. It's a positive even as it is meant to make the Treasury more money. If you hate the taxman, you are an owner, not a seller, and every rich person I have ever met hates the taxman.