{"id":21878,"date":"2012-11-15T09:23:33","date_gmt":"2012-11-15T14:23:33","guid":{"rendered":"http:\/\/www.thedisciplinedinvestor.com\/blog\/?p=21878"},"modified":"2016-09-20T13:20:35","modified_gmt":"2016-09-20T17:20:35","slug":"common-sense-raise-taxes-whack-markets","status":"publish","type":"post","link":"https:\/\/thedisciplinedinvestor.com\/blog\/2012\/11\/15\/common-sense-raise-taxes-whack-markets\/","title":{"rendered":"Common Sense: Raise Taxes, Whack Markets"},"content":{"rendered":"

Just commenting about the idea that a rise in the capital gains tax rate could be a very significant driver in pushing stock sales. Simply, this is a reaction to the idea that rolling-back the rate to the pre-Bush tax cuts could force investors to re-evaluate their positions that have run up sharply over the past couple of years. (we discussed this on this week’s TDI Podcast<\/strong><\/a>)<\/p>\n

From Bloomberg’s<\/strong><\/a> Chart of the Day Series:<\/p>\n

(CLICK TO ENLARGE)<\/em><\/p>\n

\"\"<\/a><\/p>\n

 <\/p>\n

Raising capital-gains taxes may trigger enough selling to drag down U.S. stocks, if history is any indication, according to Gina Martin Adams, a Wells Fargo & Co. strategist. The Bloomberg Chart of the Day shows realized long-term capital gains, triggered by selling securities owned for more than a year, as a percentage of U.S. gross domestic product from 1954 through 2009. The data was compiled by the Tax Foundation, a Washington-based research group backing a simpler tax code.<\/p>\n

In January, the top rate on capital gains is scheduled to rise to 23.8 percent from 15 percent. The increase figures into what\u2018s called the fiscal cliff, a combination of higher federal taxes and spending cuts. The current rate is the lowest in more than half a century, as the chart shows. \u201cStock prices look vulnerable if Congress does not act\u201d\u009d to hold down capital-gains taxes, Martin Adams wrote two days
\nago in a report. She cited the reaction to higher rates that were adopted in 1969 and 1986.<\/p>\n

Realized gains rose in both cases as many investors sold to avoid the greater tax burden, the New York-based strategist wrote. In 1986, a year before the so-called Black Monday crash in stocks, they amounted to 7.4 percent of GDP. The percentage still stands as a record.
\n\u201cRather ominously, both occurred after a period of relative stability\u201d\u009d in rates, she wrote. The 15 percent limit has been in effect since 2003, when the rate dropped as part of a tax overhaul under President George W. Bush. The reduction is among Bush-era cuts set to expire at year-end.<\/p>\n","protected":false},"excerpt":{"rendered":"

Just commenting about the idea that a rise in the capital gains tax rate could be a very significant driver in pushing stock sales. Simply, this is a reaction to the idea that rolling-back the rate to the pre-Bush tax cuts could force investors to re-evaluate their positions that have run up sharply over the […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_et_pb_use_builder":"","_et_pb_old_content":"","_et_gb_content_width":"","footnotes":""},"categories":[5,12,42],"tags":[481,490],"class_list":["post-21878","post","type-post","status-publish","format-standard","hentry","category-economy","category-markets","category-stocks","tag-economy","tag-stocks","et-doesnt-have-format-content","et_post_format-et-post-format-standard"],"acf":[],"_links":{"self":[{"href":"https:\/\/thedisciplinedinvestor.com\/blog\/wp-json\/wp\/v2\/posts\/21878","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/thedisciplinedinvestor.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/thedisciplinedinvestor.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/thedisciplinedinvestor.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/thedisciplinedinvestor.com\/blog\/wp-json\/wp\/v2\/comments?post=21878"}],"version-history":[{"count":0,"href":"https:\/\/thedisciplinedinvestor.com\/blog\/wp-json\/wp\/v2\/posts\/21878\/revisions"}],"wp:attachment":[{"href":"https:\/\/thedisciplinedinvestor.com\/blog\/wp-json\/wp\/v2\/media?parent=21878"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/thedisciplinedinvestor.com\/blog\/wp-json\/wp\/v2\/categories?post=21878"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/thedisciplinedinvestor.com\/blog\/wp-json\/wp\/v2\/tags?post=21878"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}