Howdy, Stranger!

It looks like you're new here. If you want to get involved, click one of these buttons!

In this Discussion

Here's a statement of the obvious: The opinions expressed here are those of the participants, not those of the Mutual Fund Observer. We cannot vouch for the accuracy or appropriateness of any of it, though we do encourage civility and good humor.

    Support MFO

  • Donate through PayPal

A capital gains tax hike might sink stocks. Here’s how financial advisers and their clients can sta

edited April 25 in Other Investing
https://www.marketwatch.com/story/a-capital-gains-tax-hike-might-sink-stocks-heres-how-financial-advisers-and-their-clients-can-stay-a-step-ahead-11619222398

A capital gains tax hike might sink stocks. Here’s how financial advisers and their clients can stay a step ahead.

Higher taxes for the ultra-wealthy when they sell stocks would have a ripple effect on all investors

Many financial advisers follow Warren Buffett’s lead, adopting a buy-and-hold mentality and urging jittery clients to shrug off scary headlines to achieve long-term gains. But what if those headlines signal a threat to a long-term investment plan?***









More muni tax exempt bonds eh??? Think we heard that advise numerous time in this forum

Comments

  • I've lately run across a guy with a YouTube channel, pushing his company, which assists the uber-wealthy to relocate. He's actually renounced his US citizenship and now holds at least three other passports. One is from the Caribbean island, Saint Lucia. Nice problems to have, eh? Jeez.
  • Or move to Singapore like Jim Rogers, so you can pay less taxes !
  • Has his status changed recently? From 2015 WSJ:

    Mr. Rogers: "I am an American citizen, I pay American taxes, I vote in America. I think of myself as an American living abroad. I’m one of those Americans who’s living wherever he wants to."

    https://www.wsj.com/articles/BL-272B-782
  • It's a beautiful day in HIS neighborhood.
  • I stand corrected, since I thought he cut his ties with the US ! Of course, it would be nice to be an American who's living wherever they want. Let's see: Canada, Australia, Germany, France, Switzerland, Luxembourg ,Netherlands for starters !
  • Australia, New Zealand, Thailand & Japan top my list and no I don't think that a rise in the capital gains tax rate on the rich will sink stocks.
  • Just posted today:

    "By Andrea Shalal and Trevor Hunnicutt, WASHINGTON (Reuters) -

    President Joe Biden's forthcoming capital gains tax hike proposal would affect only a 0.3% slice of U.S. taxpayers, a top economic aide said on Monday.

    Biden is set this week to propose nearly doubling taxes on capital gains to 39.6% for people earning more than $1 million, Reuters has reported, in what would be the highest tax rate on investment gains since the 1920s.

    The soon-to-be-announced tax hike will treat those investment gains as wages for top earners and applies only to about 500,000 households, according to Brian Deese, who runs Biden's policy-writing National Economic Council."
  • I sometimes wonder what would happen if the U.S. threatened to invade the Cayman Islands or any other minuscule country acting as a tax shelter to force the nation to disgorge all of the taxable wealth hidden there.
  • I think only Russia is able to do that.
  • edited April 26
    I sometimes imagine the Cayman Islands as just one big UPS Store with shiny walls of P.O. boxes for the tax shelters and a few palm trees in the background. This is fascinating reading: https://taxjustice.net/cms/upload/pdf/Tax_Notes_0707_Lessons_from_the_war_on_tax_havens.pdf
    If the U.S. truly turned against these havens--and it had in the past briefly--I doubt there would be anything they could do to stop us. The Cayman Islands has a population of 66,350 and anywhere between $1.5 trillion and $1.9 trillion custodied there, depending on which estimate you believe. But the U.S. never will, especially with Biden who represented America's biggest haven for other countries--Delaware--for many years.
  • ISTR that the British Virgin Islands was another tax haven similar to the Cayman Islands.
  • "The soon-to-be-announced tax hike will treat those investment gains as wages for top earners and applies only to about 500,000 households, according to Brian Deese, who runs Biden's policy-writing National Economic Council."
    ***************************
    And when will the SS cap be removed??????????? Shit.......
  • I wonder what would happen if the cap gains hike was retroactive. No incentive to lock in gains at lower rate.
  • The current "opinion" is that capital gains hikes, if passed, would be retroactive, would apply to people making $500,000 or more. Supposedly step up in basis will only apply to $1,000,000 transactions.

    Doubt many folks here will be affected if that is true, although it may prompt some selling. But if it is retroactive, it is too late.

    I think the step up in basis is far more likely to hit the middle class, as baby boomers inherit the greatest generation's equity accounts.
  • Historically, tax changes have been retroactive. They have been effective the year in which they were passed. The only recent exception was the 2017 Tax Cut and Jobs Act, but that became law on Dec 22, 2017.

    It's not as though people who might be affected couldn't have already planned for it:
    In light of the U.S. presidential election on 3 November 2020, many investors and business owners expecting a liquidity event are focused on the possibility that the current capital gains rate (generally, 23.8 percent) could be subject to significant change, including potentially taxing long-term capital gains at higher ordinary income rates for certain filers. While overarching considerations weigh heavily in the context of voting decisions and private business sales alike, history suggests that, faced with the prospect of a potentially changing federal income tax rate, waiting to see legislative change might foreclose opportunities to realize gains at current favorable rates.

    ...because tax legislation enacted at any time in 2021 could potentially apply to all transactions occurring in 2021, investors and business owners expecting a liquidity event should consider completing their intended transactions on or before 31 December 2020 if they would like more assurance that they will benefit from the current long-term capital gains rate.
    National Law Review, Oct 22, 2020.
    https://www.natlawreview.com/article/capital-gains-rate-historical-perspectives-retroactive-changes
Sign In or Register to comment.