Question about possible Capital Gains and dividends tax raise

[TallBill]

I see that Obama plans on raising taxes on capital gains and dividends, and without looking to hard I have not seen any plans from Mccain. Has Obama released any hard numbers, or just said that it's going up?

I'm just looking for figures here guys, not debates. From what I recall, when these taxes have gone up in the past, the revenue dropped and vice versa, but perhaps it hasn't happened enough to have firm statistical and economical facts.

 

[alien42]

McCain has said that he wants to cut capital gains in half to 7.5%

with the current market situation, capital gains are not an issue for many, if not most investments. that 7.5% difference is less than some of the bloody market days we have seen in the past few months. at this point, lowering capital gains only encourages more selling of long term holdings which is not what the market needs.

 

[miketheidiot]

Originally posted by: TallBill
I'm just looking for figures here guys, not debates. From what I recall, when these taxes have gone up in the past, the revenue dropped and vice versa, but perhaps it hasn't happened enough to have firm statistical and economical facts.

if its seen as a short run change, than capital gains tax reciepts might go down as people wait to take some gains at a lower future, but in general, when you cut taxes rates and don't change anything else in your tax code (ie fixing loopholes), revenues fall.

 

[TallBill]

Originally posted by: alien42
McCain has said that he wants to cut capital gains in half to 7.5%

Thanks, I'm just looking for facts. I'd rather form my own opinions and keep them to myself. Anyone have Obama's numbers?

 

[miketheidiot]

Originally posted by: TallBill

Originally posted by: alien42
McCain has said that he wants to cut capital gains in half to 7.5%

Thanks, I'm just looking for facts. I'd rather form my own opinions and keep them to myself. Anyone have Obama's numbers?

its whatever the rate when clinton came into office was, i think 32% but i could be wrong. Capital gains under reagan was 40%

 

[TallBill]

Originally posted by: miketheidiot

if its seen as a short run change, than capital gains tax reciepts might go down as people wait to take some gains at a lower future, but in general, when you cut taxes rates and don't change anything else in your tax code (ie fixing loopholes), revenues fall.

I cant seem to find a history on capital gains taxes anywhere, and I haven't been aware that they have even existed for more then a few years, which is why I'm attempting to educate myself now.

 

[alien42]

Originally posted by: TallBill

Originally posted by: miketheidiot

if its seen as a short run change, than capital gains tax reciepts might go down as people wait to take some gains at a lower future, but in general, when you cut taxes rates and don't change anything else in your tax code (ie fixing loopholes), revenues fall.

I cant seem to find a history on capital gains taxes anywhere, and I haven't been aware that they have even existed for more then a few years, which is why I'm attempting to educate myself now.

http://en.wikipedia.org/wiki/C...x_in_the_United_States

http://www.taxpolicycenter.org...ons/url.cfm?ID=1000519

i will give away my secret for free - http://www.google.com/search?n...=capital+gains+history

 

[TallBill]

Originally posted by: alien42

Originally posted by: TallBill

Originally posted by: miketheidiot

if its seen as a short run change, than capital gains tax reciepts might go down as people wait to take some gains at a lower future, but in general, when you cut taxes rates and don't change anything else in your tax code (ie fixing loopholes), revenues fall.

I cant seem to find a history on capital gains taxes anywhere, and I haven't been aware that they have even existed for more then a few years, which is why I'm attempting to educate myself now.

http://en.wikipedia.org/wiki/C...x_in_the_United_States

http://www.taxpolicycenter.org...ons/url.cfm?ID=1000519

i will give away my secret for free - http://www.google.com/search?n...=capital+gains+history

Thanks, I'm off to bed, but will have some reading in the morning.

Yeah, I googled, but couldn't find a direct link to any raises or lowering correlating to actual income.

 

[alien42]

Originally posted by: TallBill

Originally posted by: alien42

Originally posted by: TallBill

Originally posted by: miketheidiot

if its seen as a short run change, than capital gains tax reciepts might go down as people wait to take some gains at a lower future, but in general, when you cut taxes rates and don't change anything else in your tax code (ie fixing loopholes), revenues fall.

I cant seem to find a history on capital gains taxes anywhere, and I haven't been aware that they have even existed for more then a few years, which is why I'm attempting to educate myself now.

http://en.wikipedia.org/wiki/C...x_in_the_United_States

http://www.taxpolicycenter.org...ons/url.cfm?ID=1000519

i will give away my secret for free - http://www.google.com/search?n...=capital+gains+history

Thanks, I'm off to bed, but will have some reading in the morning.

Yeah, I googled, but couldn't find a direct link to any raises or lowering correlating to actual income.

what income numbers are you looking for? since capital gains taxes are only for long term investment sales, they are not really relevant to any income numbers that i can think of. dividends are a different story however.

 

[DaveSimmons]

I haven't seen any numbers for either candidate, but note:

1. any change has to be enacted by congress, and there's no guarantee that congress will just rubber-stamp bad ideas like the Rs did for Bush.

2. dividend and capital gains tax rates have no effect on your 401k or IRA accounts, they are tax-sheltered.

I'll be a sad panda if the dividend & long-term capital gains rates are increased though, since the mutual funds in my regular brokerage account are forced to pay me paper-profit gains and dividends every year even though I'm holding and reinvesting.

The only consolation is that this does increase my cost basis for the funds, so when I finally do sell my gains then will already have the annual gains deducted (my cost basis for the funds will be higher, taxable profit will be lower).

 

[XMan]

Originally posted by: DaveSimmons
I haven't seen any numbers for either candidate, but note:

1. any change has to be enacted by congress, and there's no guarantee that congress will just rubber-stamp bad ideas like the Rs did for Bush.

2. dividend and capital gains tax rates have no effect on your 401k or IRA accounts, they are tax-sheltered.

I'll be a sad panda if the dividend & long-term capital gains rates are increased though, since the mutual funds in my regular brokerage account are forced to pay me paper-profit gains and dividends every year even though I'm holding and reinvesting.

The only consolation is that this does increase my cost basis for the funds, so when I finally do sell my gains then will already have the annual gains deducted (my cost basis for the funds will be higher, taxable profit will be lower).

For now. There have already been hearings on Capitol Hill about the potential of removing that shelter.

 

[Engineer]

Originally posted by: XMan

Originally posted by: DaveSimmons
I haven't seen any numbers for either candidate, but note:

1. any change has to be enacted by congress, and there's no guarantee that congress will just rubber-stamp bad ideas like the Rs did for Bush.

2. dividend and capital gains tax rates have no effect on your 401k or IRA accounts, they are tax-sheltered.

I'll be a sad panda if the dividend & long-term capital gains rates are increased though, since the mutual funds in my regular brokerage account are forced to pay me paper-profit gains and dividends every year even though I'm holding and reinvesting.

The only consolation is that this does increase my cost basis for the funds, so when I finally do sell my gains then will already have the annual gains deducted (my cost basis for the funds will be higher, taxable profit will be lower).

For now. There have already been hearings on Capitol Hill about the potential of removing that shelter.

Doesn't matter about the shelter. 401k money (non Roth) is taxed as ordinary income regardless of capital gains rates are. Only those that invest in regular accounts get special tax rates. Those that invest in retirement accounts pay ordinary marginal rates on the taxable (deferred) IRA's, 401k's and other accounts (retirement).

 

[piasabird]

Wonder how this would affect a margin call when the bank forces you to sell stock? It could just add insult to injury. I pity the guy that sells and buys stock on the side to make ends meet that will pay taxes on the money he earned, then when he sells his stock he gets taxed a second time. Should be a low limit under which you dont pay the tax. Say $10,000 or maybe 100,000 or something like that to protect the little guy. I think the last time I claimed a dividend when I was in Alaska, you had to earn at least $10,000 in Dividends to have to pay any tax on a dividend.

So how does this affect the amount of money you can claim as a Loss when you sell stocks and lose money?

 

[shira]

Originally posted by: TallBill
I see that Obama plans on raising taxes on capital gains and dividends, and without looking to hard I have not seen any plans from Mccain. Has Obama released any hard numbers, or just said that it's going up?

I'm just looking for figures here guys, not debates. From what I recall, when these taxes have gone up in the past, the revenue dropped and vice versa, but perhaps it hasn't happened enough to have firm statistical and economical facts.

Obama's plan would raise the capital gains rate to 20% for those with Adjusted Gross Incomes of at least $250K for marrieds and $200K for singles but leave the current 0%/15% rates unchanged for taxpayers with lower AGIs. These rates would also apply to Qualified Dividends.

See page 7 here: Text

 

[Thump553]

pisabird: very unlikely that a person would get a margin call on a stock that is profitable. The margin call occurs when you have borrowed too much in relation to the value of your portfolio. You can't borrow too much to buy the stock, the brokerage firm won't allow it. So to trigger the margin call the value of your portfolio must have declined.

If a person choses to sell a winner rather than a loser to satifsy the margin call, I don't feel too sorry for them. If they were truely concerned about the taxes they would have voluntarily sold a loser first. If all their stocks were winners I don't see how there could be a margin call.

Somewhat related, I would propose a much more radical solution. Any gain from the sale of publically traded stock is ordinary income-no capital gains exclusions apply. The social good of a capital gains exclusion comes from the promotion of investment in small businesses, which would are not publically traded. Once you grow enough to become publically traded, the vast increase in the value of your holdings more than offsets any potential tax liability.

As for McCain's proposal, it is frankly ridiculous. A 7.5% capital gains tax is nothing more than a nuisance tax. A lot of states and localities have higher sales tax rates than that, and the sales tax is the most regressive tax possible. McCain's proposal would directly lead to further stratification of the rich and poor.

 

[winnar111]

When we cut these taxes in 1997 and 2003, revenue from those taxes skyrocketed.

A 20% cap gains puts us higher than most developed nations. The UK just set an 18% rate.

I guess Obama doesn't want our markets to be competitive.

 

[fskimospy]

Originally posted by: winnar111
When we cut these taxes in 1997 and 2003, revenue from those taxes skyrocketed.

Please read this.

I'm going to assume you are not trying to make the 'cutting capital gains taxes increases capital gains revenue' argument, because that would be silly.

 

[ProfJohn]

If Obama wins we could see a huge sell off as people try to get their gains before Obama can raise the capital gains taxes.

Do the math.

Sell now and pay 15% or sell under Obama and pay the old 28% or even the 20% he talks about.

If you have a $100,000 gain coming a 5% jump is a LOT of money. And if people really think he will return it to 28% then the bottom is going to fall out as everyone rushes to sell.

 

[fskimospy]

Originally posted by: ProfJohn
If Obama wins we could see a huge sell off as people try to get their gains before Obama can raise the capital gains taxes.

Do the math.

Sell now and pay 15% or sell under Obama and pay the old 28% or even the 20% he talks about.

If you have a $100,000 gain coming a 5% jump is a LOT of money. And if people really think he will return it to 28% then the bottom is going to fall out as everyone rushes to sell.

Oh Pro-Jo.

The main reason people say that cuts in capital gains increase revenues is due to the spike in sales after a capital gains tax cut. If we cut capital gains taxes everyone will sell and the bottom will fall out! AHHHH! If we do anything but maintain the tax rate at this exact rate the stock market is doomed!

 

[Xavier434]

Originally posted by: eskimospy

Originally posted by: winnar111
When we cut these taxes in 1997 and 2003, revenue from those taxes skyrocketed.

Please read this.

I'm going to assume you are not trying to make the 'cutting capital gains taxes increases capital gains revenue' argument, because that would be silly.

That is a very educational site. Thank you for posting it.

 

[TallBill]

Originally posted by: eskimospy

Originally posted by: winnar111
When we cut these taxes in 1997 and 2003, revenue from those taxes skyrocketed.

Please read this.

I'm going to assume you are not trying to make the 'cutting capital gains taxes increases capital gains revenue' argument, because that would be silly.

Great link, thanks.

 

[Zorba]

Originally posted by: ProfJohn
If Obama wins we could see a huge sell off as people try to get their gains before Obama can raise the capital gains taxes.

Do the math.

Sell now and pay 15% or sell under Obama and pay the old 28% or even the 20% he talks about.

If you have a $100,000 gain coming a 5% jump is a LOT of money. And if people really think he will return it to 28% then the bottom is going to fall out as everyone rushes to sell.

Wouldn't someone just sell their stock, pay the 15% and then rebuy the stock (assuming they liked it) to increase their cost basis before the new tax policy took affect? I doubt they would pull the money and leave it on the sidelines just because capital gains tax went up a little bit, still a much lower tax than normal income our interest payments.

 

[alien42]

Originally posted by: ProfJohn
If Obama wins we could see a huge sell off as people try to get their gains before Obama can raise the capital gains taxes.

Do the math.

Sell now and pay 15% or sell under Obama and pay the old 28% or even the 20% he talks about.

If you have a $100,000 gain coming a 5% jump is a LOT of money. And if people really think he will return it to 28% then the bottom is going to fall out as everyone rushes to sell.

i take it you have no investments that fall into this category. if you think a 5% jump is a LOT of money, where have you been the past month? do you realize how many single trading days we had where stocks lost more than 5% day after day after day. the reality is that if you did not sell your long term holdings already, selling them now is a horrible idea because the selloff has already happened.

 

[StageLeft]

Originally posted by: ProfJohn
If Obama wins we could see a huge sell off as people try to get their gains before Obama can raise the capital gains taxes.

Do the math.

Sell now and pay 15% or sell under Obama and pay the old 28% or even the 20% he talks about.

If you have a $100,000 gain coming a 5% jump is a LOT of money. And if people really think he will return it to 28% then the bottom is going to fall out as everyone rushes to sell.

We have already had a huge sell.

Anyway, I'd love to hear from all these people who are looking at big capital gains taxes this year, you know considering the DOW is down 33% in the last year.

 

[TallBill]

Originally posted by: Skoorb

Originally posted by: ProfJohn
If Obama wins we could see a huge sell off as people try to get their gains before Obama can raise the capital gains taxes.

Do the math.

Sell now and pay 15% or sell under Obama and pay the old 28% or even the 20% he talks about.

If you have a $100,000 gain coming a 5% jump is a LOT of money. And if people really think he will return it to 28% then the bottom is going to fall out as everyone rushes to sell.

We have already had a huge sell.

Anyway, I'd love to hear from all these people who are looking at big capital gains taxes this year, you know considering the DOW is down 33% in the last year.

lol It'll be back to "not shitty" in 5 months and at record highs in 24 and whoever is the president will take credit for the business cycle.