Stock Market crash coming if tax cuts are not extended?

[bjl584]

I've been seeing this story pop up recently. Basically, the argument is that if Federal tax code (the so called Bush Tax Cuts) are not extended by Congress before years end, then investors will be advised to lock in the lower Capital gains tax rates during this calendar year and sell any holdings that they have a gain on.

I find it to be a bit over reactionary, but it makes for an interesting argument. What do you think?

[disneysteve]

I think the vast majority of stock holdings are within mutual funds within retirement accounts and institutional accounts. People owning stocks in their 401k, 403b, IRA and Roth don't care about this either way. Huge charitable endowments holding stocks don't care since they aren't subject to the same taxes as individual investors.

Will there be some profit-taking from individuals? Probably so. Will it crash the market? Probably not.

[EconoMutt]

I agree with disneysteve.
I really don't think it will have much effect.
The CNBC crowd pushes that type of thinking.
They've even implied that rich people will get
pi$$ed off and leave the country unless they get the tax break.

[snafu]

If I'm reading the figures correctly, the Bush tax cuts benefited about 2% of American households. Of course entertainers and TV 'talking heads' are included in that 2%. Rush Limbaugh, Rommney, Pailin, are names off the top of my head that would be affected. It wouldn't bother me to have them follow Dr. Laura into silence.

I can't believe my eyes when I see the PR guys tout Jeb Bush...ahhh the Bush dynasty. Do you think those are the same PR folks who are working so hard to obfuscate the Nixon 'legacy.' Look at the damage GWB and Cheney accomplished. FY2010 appropriations for Iraq & Afghanistan are $1.21 trillion...with a 'T.' Do you feel safer?