Capital Gains tax increasing soon.

[Andrew Jackson]

Huge (53%) Tax Increase On SAVERS - The Market Ticker

Bummer. As soon as I get into the game they decide to increase the taxes on investors.

But for the person who is INVESTING for the long haul, that is, who is holding stocks for more than one year, this takes the marginal rate from 15% to 17.9%, an increase of almost 20% in the tax owed.


Oh, and let's not forget that there was already a huge tax increase coming this year - the long term capital gains rate goes to 20% at the end of this year anyway as the Bush tax cuts expire.

So in fact the rate goes from 15% to 22.9%, a fifty-three percent increase in the tax rate.

So it goes up about 3% to help pay for the health care bill and another 5% with the Bush tax cuts ending at the end of the year. Any chance Obama could still extend the tax cuts before the year ends though?

Also, does this tax only apply once your money is taken out of the market? Or do they tax gains on paper even though they have not been cashed out?

[creditcardfree]

Don't worry about the capital gains tax rate if you are in a retirement account. The money is taxed when you pull it out at your ordinary income tax rate, or tax free if a Roth.

Captial gains apply to gains when you sell the asset (ex. mutual fund or individual stock), but also can be accumulated each year in a mutual fund, when the fund manager sells stocks at a profit. Fund managers often have to sell stock just to meet the demands of investors withdrawing money. The gains within a mutual fund are distributed to all shareholders, who then have to pay taxes on them.

[cptacek]

Are you really asking if Nancy Pelosi will act to extend the BUSH tax cuts? If you think that, you aren't paying attention.

[GrimJack]

No one went broke paying capital gains taxes.

[Andrew Jackson]

No one went broke paying capital gains taxes.

Very true. Better to have to pay them than to take the deduction for losses.

[Andrew Jackson]

Are you really asking if Nancy Pelosi will act to extend the BUSH tax cuts? If you think that, you aren't paying attention.

No, I'm asking about Obama. Did people think he would be for drilling oil? You never know. But yeah, it's unlikely.

[cptacek]

No, I'm asking about Obama. Did people think he would be for drilling oil? You never know. But yeah, it's unlikely.

Changing the tax code has to pass Congress. That means Nancy Pelosi has to schedule a vote on the floor. I'm saying that will never happen. Obama couldn't do anything even if he wanted to, which he doesn't.

[EEinNJ]

As (mis)stated, the amount of tax increase is misleading. If the rate goes from 15% to 20%, it's going up 5%. The amount you pay goes up 33%, which makes a nice indignant headline, but in reality you would pay just $5 more per $100 profit. Overall it's still a good deal compared to income tax- not that I'm in favor of taxes!

[feh]

As (mis)stated, the amount of tax increase is misleading. If the rate goes from 15% to 20%, it's going up 5%. The amount you pay goes up 33%, which makes a nice indignant headline, but in reality you would pay just $5 more per $100 profit. Overall it's still a good deal compared to income tax- not that I'm in favor of taxes!

It's an excellent deal. Too good of a deal, in fact; it's one of the reasons the deficit has exploded the last 9 years.

[cptacek]

It's an excellent deal. Too good of a deal, in fact; it's one of the reasons the deficit has exploded the last 9 years.

lol. low capital gains tax was the cause of the deficit? increased spending isn't the major factor, huh?

[feh]

lol. low capital gains tax was the cause of the deficit? increased spending isn't the major factor, huh?

Please don't twist my words. I said it was one of the reasons, and it is (although this graph shows the effect of all the tax cuts, not just the reduction in capital gains).

Tax cuts for the wealthy when spending (primarily on wars) was increasing was an amazingly irresponsible thing to do.

[cptacek]

"It's one of the reasons the deficit has exploded in the past nine years"

is similar to

"After Michael Jordan scored 50 points, and Jack Haley scored 1 point, Haley said "One day I'll be able to tell my grandchildren that Michael Jordan and I scored 51 points together.""

Perhaps true, but misleading.

[feh]

"It's one of the reasons the deficit has exploded in the past nine years"

is similar to

"After Michael Jordan scored 50 points, and Jack Haley scored 1 point, Haley said "One day I'll be able to tell my grandchildren that Michael Jordan and I scored 51 points together.""

True, but misleading.

Do you have a source that illustrates something contradictory to the image I provided? If not, you're just blowing smoke, and I encourage you to educate yourself.

[cptacek]

President Obama has proposed raising the capital gains tax rate to generate billions in new revenues for the federal government. However, according to data included in the President’s own budget, if implemented this tax increase would—at best—offset the tax revenue from other sources that would be lost because of reduced total income, output, and jobs in the economy. Thus, the President is intentionally sacrificing jobs in the pursuit of his own notions of fairness with little or no hope of increasing revenues in the process.

Capital Gains Tax Hike Unlikely to Increase Revenues | The Heritage Foundation

[feh]

Capital Gains Tax Hike Unlikely to Increase Revenues | The Heritage Foundation

That's a completely different subject I'd be willing to discuss if you wanted to start another thread.

Do you have a source that illustrates the tax cuts of the last 8-9 years didn't have a profound effect on the deficit?