Skip to comments.Tax Hikes May Feed Short-Term Investing
Posted on 04/15/2010 7:46:39 AM PDT by Slyscribe
From a stock market standpoint, the combination of tax changes due to take effect at year-end seems to be the worst of both worlds.
For those with both short-term and long-term gains, their taxes are set to rise, providing an incentive to take profits. Further, because of the increase in taxes on long-term capital gains, those with short-term gains will have a reduced tax incentive to hold on to their positions for a full year and convert them to long-term gains.
Investors holding gains on positions established in 2010 face a choice: sell this year and face a 35% income tax, or hold for a year and face a 20% tax a difference of 15 percentage points.
If, on the other hand, the capital gains rate were staying at 15%, the increase in the top income tax rate to 39.6% would leave a 24.6 percentage-point spread between the tax rates on long-term and short-term gains effective Jan. 1.
(Excerpt) Read more at blogs.investors.com ...
I am looking into this right now also. Here is my research:
I am trying to figure out if I want to sit on my company stock purchase for a year, or take some nice profits right now and be done with it...
“take some nice profits right now and be done with it...”
You and millions of other investors. If Obama’s lucky, you’ll all take your profits before November, leading to an artificial boost in federal tax receipts and the short-term economic outlook right before the election.
Speaking of short term artificial boost in federal tax receipts.... My tax preparer has had numerous (at least two a day since Feb) individuals who have not filed returns for years come in for assistance.
Most were self employed, and owed income and SS/Medicare taxes...
My CPA said it’s not a pretty sight.
Long-term capital gains (LTCG) More than one year 5% for taxpayers in the 10% and 15% tax brackets (zero percent starting in 2008)
I just need to adjust my income to the 10% or 15% bracket and sell all my long term investments.
I got hosed this year on short term. (Hey, the stock market hit bottom and I was just in the neighborhood chasing ‘subsidies’)