Obama calling for raising the Cap Gains tax

[NorthSideSox72]

Now, I'm a supporter of Obama. But this is just not a smart decision. He tells CNBC he is thinking of taking the current 15% gains tax, and upping it to around 25% (no exact number yet). Under Clinton, it was 28%.

 

I am all for changing the tax code to treat gains as income for those who take most of their income from trading activities of their own capital - that just makes sense, closing the loophole. But to change the cap gains tax rate across the board that dramatically, basically doubling it, when the economy is staggering... that's just a bad, bad idea.

 

[HuskyCaucasian]

it's all gibberish to me. I have no capital gains. lol

[NorthSideSox72]

it's all gibberish to me. I have no capital gains. lol

And that's why this goes under the radar - for a significant chunk of Obama's core constituency, it all just looks like less money for rich investors, and that's fine with them. But in reality, if those "rich" investors put less money into the capital markets, the whole economy suffers. You have to be very careful with that tax level.

 

[BigSqwert]

Sen. OBAMA: No, no, no, absolutely. And that's why I think that it may be, for example, that you could structure something in which people with certain incomes were exempted from this increase and it would stay at 15.

[BigSqwert]

Sen. OBAMA: Well, you know, what I've said is that we should go back to probably a top marginal rate of 39 percent what it was before the Bush tax cuts. So I would roll back those Bush tax cuts, I would not increase taxes for middle class Americans and in fact I want to provide a tax cut for people who are making $75,000 a year or less. For those folks, I want an offset on the payroll tax that would be worth as much as $1,000 for a family. Senior citizens who are bringing in less than $50,000 a year in income, I don't want them to have to pay income tax on their Social Security. And as part of my overall approach to housing, I actually want to provide an additional 10 percent mortgage deduction, a credit, mortgage interest credit, for those who currently don't itemize. Because if you live in a house that's pretty expensive, like I do, and I itemize, I get a pretty big break from Uncle Sam. If you own a $100,000 house and you're making 65, $75,000 a year, you're not getting that same deduction. I think that they deserve a break as well. That will actually help relieve some of the pressure on homeowners.

[NorthSideSox72]

Not going to help much. You need to have the institutional money in the markets, and you need the large scale investors putting cash in.

 

Like I said, there are smart ways to close some loopholes and get things right. This is just not smart.

 

[lostfan]

I don't know why you're surprised that a Democrat would want to raise taxes for the rich (people with significant capital gains usually = rich people) after a 2-term Republican administration. That is pretty much a concrete thing and will never change. Plus Obama said like a year ago he'd raise taxes.

 

As for the timing in the crappy economy, that's another thing. But I'm convinced none of the candidates really know much of anything about how to manage the economy anyway.

[NorthSideSox72]

And all those things, in that quote (the one from BS there, of Obama's), are just fine.

[BigSqwert]

Not going to help much. You need to have the institutional money in the markets, and you need the large scale investors putting cash in.

So you think large scale investors will stop investing? I somehow doubt that.

[NorthSideSox72]

I don't know why you're surprised that a Democrat would want to raise taxes for the rich (people with significant capital gains usually = rich people) after a 2-term Republican administration. That is pretty much a concrete thing and will never change. Plus Obama said like a year ago he'd raise taxes.

 

As for the timing in the crappy economy, that's another thing. But I'm convinced none of the candidates really know much of anything about how to manage the economy anyway.

Raising the top marginal income rate a bit is fine. Closing loopholes for own-money traders is fine. Decimating the markets by doubling the cap gains tax across the board is not fine.

 

[NorthSideSox72]

So you think large scale investors will stop investing? I somehow doubt that.

Not stop, no - that's not the point. Its a matter of where they put their money. This is something that has been shown to be the case repeatedly. If the cap gains tax is higher, those people will find other investment vehicles, where the resulting economic positives won't translate as directly to the US economy's good.

 

[southsider2k5]

Just when you think the Democrats can't lose, they find the issue to hand the election to John McCain. Raising taxes will not get you elected in this day and age.

[BigSqwert]

Decimating the markets by doubling the cap gains tax across the board is not fine.

 

 

Sen. OBAMA: No, no, no, absolutely. And that's why I think that it may be, for example, that you could structure something in which people with certain incomes were exempted from this increase and it would stay at 15.

[StrangeSox]

Sen. OBAMA: No, no, no, absolutely. And that's why I think that it may be, for example, that you could structure something in which people with certain incomes were exempted from this increase and it would stay at 15.

 

What are these "certain incomes?" Democrats seem to view anyone making over $75k as rich.

Edited March 27, 2008 by StrangeSox

[NorthSideSox72]

Sen. OBAMA: No, no, no, absolutely. And that's why I think that it may be, for example, that you could structure something in which people with certain incomes were exempted from this increase and it would stay at 15.

Incomes are not the key factor for cap gains taxes. They are basically unrelated. And in fact, for the few people in low income brackets who do invest, THEY won't notice the differential change in their bottom line. Its the bigger investors that will take notice, and shift their money.

 

[StrangeSox]

Incomes are not the key factor for cap gains taxes. They are basically unrelated. And in fact, for the few people in low income brackets who do invest, THEY won't notice the differential change in their bottom line. Its the bigger investors that will take notice, and shift their money.

 

They'll also not have that extra 10-13% to re-invest.

Edited March 27, 2008 by StrangeSox

[kapkomet]

Sen. OBAMA: No, no, no, absolutely. And that's why I think that it may be, for example, that you could structure something in which people with certain incomes were exempted from this increase and it would stay at 15.

Do you have a clue how this stuff works? Because if you did, you would realize how bad this is. But to you, it's about "rich people" paying their fair share. I'm glad to know I'm "rich".

 

[BigSqwert]

Do you have a clue how this stuff works? Because if you did, you would realize how bad this is. But to you, it's about "rich people" paying their fair share. I'm glad to know I'm "rich".

I didn't realize what a well-oiled machine is currently in place. When do we start paving our streets with gold?

[NorthSideSox72]

I didn't realize what a well-oiled machine is currently in place. When do we start paving our streets with gold?

I don't know, but if you expect the government to do that job, you'll get streets paved with lead, painted in gold.

 

[southsider2k5]

What are these "certain incomes?" Democrats seem to view anyone making over $75k as rich.

 

And I would bet that 95%, at least, of investment money comes from this income bracket. You would literally be penalizing the very people who put liquidity and capital into the markets. Poor people by their very nature don't invest, because they don't have the disposable income to invest. If you start making it too expensive to invest, people will search out other areas to place their money. If we get back to 39% income taxes and 28% capital gains taxes, to go along with the inflation problems and lack of lending capital, it will be the mid to late 70's all over again.

[jasonxctf]

And I would bet that 95%, at least, of investment money comes from this income bracket. You would literally be penalizing the very people who put liquidity and capital into the markets. Poor people by their very nature don't invest, because they don't have the disposable income to invest. If you start making it too expensive to invest, people will search out other areas to place their money. If we get back to 39% income taxes and 28% capital gains taxes, to go along with the inflation problems and lack of lending capital, it will be the mid to late 70's all over again.

 

or people will invest through traditional tax-free investment routes like 401ks and IRA's and thus no capital gains penalities until they retire, when their tax rates are lower. if anything, a rate increase would mean that more long-term investing would be utilized rather than the short-term ups and downs of today.

[southsider2k5]

or people will invest through traditional tax-free investment routes like 401ks and IRA's and thus no capital gains penalities until they retire, when their tax rates are lower. if anything, a rate increase would mean that more long-term investing would be utilized rather than the short-term ups and downs of today.

 

Which both have relatively low caps for what the type of investing we are talking about. The people who are making these markets are smart enough to contribute tax free before they start doing things that deal with capital gains. These people are educated investors.

[southsideirish71]

Doesn't capital gains hit those who invest in real estate. Nothing like helping out the crippled real estate market.

[lostfan]

Doesn't capital gains hit those who invest in real estate. Nothing like helping out the crippled real estate market.

If there are people who are hurting right now because they flip houses for a living I can't say I have any sympathy for them right now. Sucks to be them. They weren't complaining when it was going great for them the last few years, when they actually were part of the inevitable problem they were causing.

Edited March 28, 2008 by lostfan

[NorthSideSox72]

Doesn't capital gains hit those who invest in real estate. Nothing like helping out the crippled real estate market.

Good question - I had thought this was only on non-residence real estate. I don't think you pay cap gains on homes you live in.