Capital Gains Rate to 28%?

Discussion in 'Trading' started by wareco, Feb 12, 2008.

  1. As part of his "Tax Fairness for the Middle Class" plan, Barack Obama is in favor of nearly doubling the capital-gains tax rate from 15 percent to 28 percent. Leaving the fairness issue aside for a moment—as well as the impact of higher taxes on economic growth—the Obama plan could also be called a "Ways in Which Government Can Collect More Taxes to Pay for New Spending" plan, since Democratic candidates are all scrambling to figure out ways to plausibly pay for new healthcare, education, and infrastructure spending if elected.

    But Dan Clifton over at Strategas Research thinks the Dems may be disappointed by the ROT—return on taxes—from higher cap-gains rates. After reviewing the connections between changing cap-gains rates and government revenue during the past five decades, he concludes that higher cap gains could well be a revenue loser for Uncle Sam.

    We examined the impact of capital-gains tax rates on investors realizing their gains. As the tax rate increases, investors hold their gains to avoid paying the higher tax. Conversely, lowering the capital-gains tax rate spurs realizations. Interestingly, the 1986 Tax Reform Act increased the capital-gains tax rate from 20 to 28 percent, but investors were given roughly three months before the tax increase was enacted into law. In turn, investors rushed to realize their gains before the higher tax rate kicked in, and capital-gains realizations remained depressed for nearly a decade thereafter with the higher tax rate in place.... Therefore, proposals to raise tax revenue from capital-gains tax increases will be scored as a net revenue gain to pay for new spending, but in reality, the tax revenue may not materialize, which will force tax increases elsewhere to pay for spending.
  2. Robin Hood is just pandering to the lower classes. The actual facts do not mean a thing.
  3. I'd be more interested if it affects the low blended tax rate for Futures and Commodities.

    Hopefully, there will be no change in that. The 23% tax rate is very nice.

    Any one know if/when the 2003 Tax Act expires?
  4. i thought the tax rate is 15% only for people who make under 25k on the federal tax level.
  5. obama wants your do the clintons

    vote mcain

  6. Actually, no. If you really wanted to get rid of the capital gains tax, and taxation as we know it, vote Huckabee.
  7. Osama's never heard of the Laffer curve.
  8. Well, of course it will affect the blended tax rate for futures. Section 1256 calls for 60% of the gain to be taxed at capital gains rates, whatever they are at the time.

    I believe the 2003 Tax Act expires 12/31/2010.
  9. Absolutely; Huckabee is the only one who makes any sense.

    I am a registered democrat but have not voted as a democrat for several years. I don't know what has happened, but this new wave of Democrats just does not get it.
  10. That's why the Democrats have their moderate candidate, John McCain, to ride to the rescue :D
    #10     Feb 12, 2008