DAVOS, Switzerland — Raising taxes on wealthy Americans in response to the defining issue of our time — income inequality — could have huge and unintended consequences on markets, according to billionaire Ray Dalio, founder of the world's biggest hedge fund.
Dalio, who runs $160 billion at Bridgewater Associates, believes the political reaction to the yawning gap between the haves and have-nots will likely determine who wins the 2020 presidential election. But he said there are serious impacts to be considered ahead of such changes, including Rep. Alexandria Ocasio-Cortez's proposed 70 percent tax rate on earnings above $10 million.
"How tax rates are changed will have a huge effect on incentives and could have a huge effect on capital flows, and that will have big effects on markets and economies," Dalio said in an interview on the sidelines of the World Economic Forum in Davos. "It's going to be a bigger market-influencing issue than people now realize."