I believe what I'm saying, and others can disagree. 80 to 85% return shouldn't really effect how anyone invests. If someone believes something will make money why would someone not invest in it? If someone waits and decides to invest in something else because of a 5% tax hike, then why not just invest in that same thing when it was 85% of the profit being kept? The idea that someone will choose not to make money because the profit goes from 85% to 80% doesn't make sense. I understand that investing is a risk, and I don't have a problem with people being rewarded for that risk. But that is different than working for the money. It is risking rather than working. At a time when teachers, firemen, prison guards, policemen, etc. are having their benefits cut, and have to cut back, I have no problem with investors having to make sacrifices to. Our nation needs it right now.
Then why stop at 80%, drop the profit to 50%, as long as its above zero people would keep investing right?
Then people are idiots. If I'm going to make money by investing. I'm not going to let making 80% instead of 85% stop me. If other people choose not to make money because of it, then it's their loss.
The point is that it DOES affect investment decisions. Ask your financial planner. If he says otherwise, take your money out of his hands with a quickness. Are you aware that there are different tax rates for short term and long term capital gains? Do you know what opportunity cost is? Just because I'm making money on an investment doesn't mean I'm going to keep it there if I can get a better return elsewhere. It's not about simply making money. It's about getting the best return I can for my money. And your point about investors needing to sacrifice because others are... Who do you think investors are, just the uber wealthy on Wall Street? They come in all colors, shapes, and levels of wealth. Everyone's feeling the pain. It's not limited to the middle class only. I find it amazing how people speak for millionaires saying they aren't hurting as bad. Sure, they might have a richer lifestyle than some of us, but wouldn't you be concerned about losing money you have earned? I would.
It depends on the risk. There are different IRA's and other things that aren't really a risk that will give some return as well. It depends on when the amount of return is worth the risk, and when it's easier and safer for the amount of return to put the money into something set.
I'm not saying nobody should be concerned about losing their money. Of course they should. Yes others besides the uber wealthy invest. But hopefully not more than they can afford to lose. As far as feeling the pain... Only making 80% on capital gains money instead of 85% isn't really feeling the pain in the same way that a fireman is who has to start paying $387 more a month to keep the same health insurance he was making before, or teachers having to lose a week's salary, and also pay the same $387 increase. Sorry but those sacrifices just aren't equal. I know that a lot of the capital gains money gets re-invested right away. That doesn't make it more important that the rates aren't raised, it makes it less important.
Are people honestly arguing that money is moving out of this market because of taxes. That's laughable.
I don't know how to explain it any simpler than I have to you. But here's the main point. Capital is what fuels growth. You tax that capital harder, you make it harder for this economy to grow. It isn't the best time to make people "sacrifice" what is needed to pull us out of the recession. Understand?
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The capital gains rates over the last 8 years haven't really helped. The higher capital gains rates during Clinton's years did just fine as far as growth goes. It isn't unreasonable. People are just grumbling because the tax rate on capital gains taxes is closer to the percentage that workers pay on their income. The rate isn't prohibitive. Investment is only one of the factors that generates growth. Consumer spending, job creation etc. will also do that. With capital gains taxes lower the idea is just to hope more people will invest. Some will and some won't. What we have now is the govt. giving a temporary stimulus to create those jobs. There is no hoping some investors do it. It's being done for sure. Meanwhile they are using taxes to help pay for that investment and other govt. expenses.
The minimal increase on the richest of Americans won't occur until the country is already on it's way to recovery. So I don't see how your question even makes sense. The people who will pull us out of this are small businesses and consumers, not rich people and corporations. The rich have stopped investing and won't invest again until they already see the economy recovering...they don't drive investment. Corporations are the same, they won't start hiring and they don't account for most of the jobs anyway. What will happen is that inventories and production will fall off to levels that are too low. People are holding off purchases that they do need but pushing it out to the last minute. A car someone wants to buy - they will wait and squeeze every last bit out of that clunker. The result is savings is going up. This is a very good sign. It's this savings that will be the foundation for a future recovery. What Obama is doing isn't what will turn around the economy, what he is doing is preventing it from collapsing. That's all he can do. He has to use the gov't to prop up the missing credit and missing consumer spend, and lost jobs while things stabalize. Once we get past this shaky period, and job losses stabalize and new unemployment claims start to dip and in fact employement creeps up because companies have overcut production...you will start to see a few things. Don't be surprised if companies start announcing profits in the 3rd qtr this year. THey have cut so quickly in anticipation of declining sales that they may turn black ink and suprise Wall Street. Once those two things happen, the stock market will recover a bit, and people will start making those critical purchases on durable goods they have held off - and slow the recovery will be underway. It's not led by the rich...it's led by mechanics of over-reacting and the pendulum swinging to far one way. The key to the recovery is to sustain it. Part of that is the tax hike on the rich. It's time they pay a bit more and feel some suffering like the other 99%of America. A bigger part is cutting the deficit and cutting spending - drastically. That will limit the recovery but not stop it because a declining federal deficit will help keep interest rates and inflation under check. Classic Macroeconomics.
Consumers of countries like China, Germany and Japan will pull the world out of recession. The funds of the typical American consumer is as dry as a turnip. Paradox of thrift goes global.
