Skip to comments.Huge (53%) Tax Increase On SAVERS
Posted on 03/17/2010 9:11:29 AM PDT by Attention Surplus Disorder
If you were wondering where the hidden taxes are in "Health Reform", guess what - President Obama has just given you something to sit on.
The forced march to pass ObamaCare continues, and all that matters now is raw politics. But opponents should go down swinging, and that means exposing such policy debacles as President Obama's 11th-hour decision to apply the 2.9% Medicare payroll tax to "unearned income."
That's what savings and investment income are called in Washington, and this destructive tax wasn't in either the House or Senate bills, though it may now become law with almost no scrutiny.
This is unbelievably destructive to capital formation.
For the person who is "short-term trading" (e.g. daytrading, etc) this is a relatively small tax, an increase of about 7% in the tax (2.9% applied to the 39.6% maximum rate on "ordinary income", which short-term capital gains are.)
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.
This, of course, comes on the back of President Obama's fraudulently engineered "rally", which was created through Congressional intervention to permit - surprise surprise - legalized accounting fraud through "mark to model."
So you got your stock market rally, and now President Obama and The Democrats are going to cram a 20% tax increase down your throat if you profited from it - and at this point, being 2010, there's not a thing you can do about it.
It gets better. Since ordinary investors can only write off $3,000 in capital losses, when you lose you don't get a tax credit. Oh yeah, you get to carry forward the loss to future years, but you paid the tax on the gains already - this is a putative future credit back.
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.
And oh, if your AGI goes over $200,000 by even a dollar you are subject to this tax from the first dollar of your investment income.
A fifty-three percent increase in taxes on long-term (that is, capital-forming, long-term investment) capital gains - exactly the sort of investment activity you want to form businesses and invest for the long haul in America's future, not to mention generating jobs by forming those enterprises.
That's slammed the door on any interest I might have in forming a new business as I did in the 1990s - ever - and I suspect I'm not alone.
When this goes into effect my capital, other than that which I can shelter from taxation, is no longer going to be put at risk in the markets. I'd rather live in a nice little cottage on the beach and simply expend what I have rather than contributing to capital formation in any way, shape or form under a punitive system like this.
Because if Congress demonstrates that it will put 53% on the capital gains rate once I've already committed my capital (thereby destroying my return) I will not take the risk of them doing it again and making the rate even more punitive.
Call me Pollyanna, but I’m still hopeful that even if this monstrosity passes, we will be able to undo it.
We just need to make sure it doesn’t pass!!!!!!!!!
pretty soon companys will probably have to send our checks to washington and then washington will dole out to us what they want after they take theirs....
Democrats die if they don’t increase taxes.
We need enough of a margin in November to thwart the maoist’s plans for the USSC, the tax code, and of course, undo the health care taxes.
This was rumored before the election, but I thought we’d have some warning, not have it snuck thru in the HC bill!!!
I’m hoping IF it passes it gets tied up in the courts forever. AND I’m expecting the states to stand up and say “oh no we won’t” and mean it.
Entitlements, once given, are to the Democrats favor.
We are seeing the death of Conservatism.
You mean we won’t be able to act like democRATS an just use a simple majority? :-)
Obama will bring back the days of saving money.
In your mattress.
Obama lied! He said he wouldn’t raise taxes on those earning less than $250,000, yet, here is another example of his taxing those people.
“Obama will bring back the days of saving money.
In your mattress.”
You make a serious point actually. His taxing, taxing, and taxing is going to force people to keep their money privately when this economy needs the cash influx from private holdings. This is going to significantly hurt the economy even further.
I think dems view investing as something only done by the rich. His promise of no raising taxes for those earning less than $250K is probably just for base w-2 income. I really think they believe if you have the capacity to invest, you have the capacity to pay taxes on those returns.
That is exactly what I told hubby. If this passes then I will only allow enough to go into the savings to cover the housepayment and keep the checking under a certain amount and only add to it when we need to pay insurance or taxes.I plan to add an in the floor firesafe here in the house to hold everything else.Thgey are not going to take our money anytime they want!
I find this sentence hard to believe, and if true, even harder to swallow. This is a marginal tax rate of many thousands of percent on that additional dollar! I thought that taxes were supposed to increase "smoothly" as you went up the schedule. This would be unprecedented if true.
I think that falls in line with the evil bastard’s plan. There’s nothing wrong with ObaMarx that a terminal disease won’t cure.
What??? Obama lied??? I’m shocked!
You can tell Obama is lying by the way his lips move.
Investment is a critical component of capitalism. If we don’t reward investors, the system is crippled. Not only does O-a$$hole not want to reward investors, he wants to punish them. If we don’t stop this EVIL IDIOT, we’re doomed.
Yep, capitalism thrives when produced capital is used to produce more capital. It suffers at the hands of little kids who think our money is burning a hole in their pocket.
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