Posted on 09/15/2004 10:25:57 AM PDT by kingattax
As George W. Bush mounts a strong comeback in the polls, stock market averages are mounting their own stealth recovery. There’s a clear link here. Should the president be reelected, tax-rates on capital will stay low and may even drop some more. Wall Street likes this.
Bush’s concept of tax reform is focused on reducing the multiple taxation of saving and investment. Under current law the same dollar of income is taxed once as work effort, a second time as corporate earnings, a third time as dividends, a fourth time as capital gains, and a fifth time as inheritance. This is a capital killer.
(Excerpt) Read more at nationalreview.com ...
Kerry wants cap gains at 20%. This means a 6% (80/85) decrease in return, and because markets are driven by yield, price of stock.
Bush at 0% offers a gain of 17% (100/85) in yield and price.
As pols lean toward Kerry market falls off 6%, because change is likely. As pols move toward Bush, stocks up but not the full 17%, because passage not assured in deficit environment.
Note1: If Kerry elected, stocks off 6% create a loss of $1.2 trillion or $240 billion tax losses. He will not breakeven over his 4 years.
Note2: Bush can pass 0%, by paying for it with a one time tax, as follows: The day before 0% goes into effect, tax accumulated capital gains at 15%, with payment over 4 years. Result $1-1.5 trillion in taxes, with stock markets up 17%, of $3.4 trillion, with faster growth to follow. Also opens the door for ownership and flat tax proposals.
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