Obama is in favor of potentially doubling the capital gains tax rates:

http://www.usnews.com/blogs/capital-commerce/2007/9/19/obama-pushes-for-higher-investment-taxes.html 

http://money.cnn.com/2008/06/20/news/economy/obama_capgains/index.htm?postversion=2008062007 

The CNN article states:

He wants to raise the rate above 15% for high-income investors. 

What's considered "High Income".   Does this mean it would stay at 15% for certain incomes?  If so, has he said what they would be?

Anyway, just wondering what some of your thoughts are on this?   Is there anyone here who's actually in favor is this,  and if so,  why?

If he does raise in fact raise the capital gains tax rate?   Will this alter how you invest/trade?

What does this mean for small time traders who invest outside of an IRA?   The thing that really bugs me is it seems anyone who has a little money to invest in the stock market through a regular brokerage account (outside of an IRA) is going to be grouped into the "High Income" category and are the ones who are will be punished by this.  To be honest,  I don't know the details of his plan, but it seems to me the the average Joe whose trying to get ahead and wants to try and make some income through the stock market (outside of their IRA)  will be seen as a gambling Hedge Fund manager. 

Whenever the government try's to punish the rich, it usually winds up hurting the middle class even more.

Everyone who invests in stocks is considered "high-income." I've been trying to debunk this lie that Obama's blatantly spreading about the capital gains tax hike that he wants to do to all my friends. It is NOT on "high-income" only. True, the taxes are bracketed into levels based on your income, but for the most part, all investors fall into the same category.

 Check out this blog I made more than a year ago on the same topic and the comments:

http://community.tradeking.com/members/locogmac/blogs/4714-the-effect-of-capital-gains-tax

Well, I'm anti-Obama for a wide variety of reasons.  Primarily, he's very "liberal" when I generally have conservative values.  And, he appears to be a very "tax and spend" Democrat who wants to raise taxes, which would hurt any potential profit that I make on TK.  Generally speaking, I'm usually against the government taking my money.  Why? Because 1) I like keeping my money so that I can spend it.  2) The government is very inefficient and wasteful with money, so I feel like it's better in my hands than in the governments.  

Now, Obama is an excellent speaker, and he talks a great game.  All this "hope" and "unity" talk is great and loads of people are buying into it, but basically, what you've got here is one of the, if not the most liberal senators in the senate, who basically wants to raise taxes and promote a bunch of super-liberal causes.  Bush has pooed in the nest for Republicans, McCain isn't that great of a candidate, and people *really* want a change from Bush, so the Obama steamroller keeps trucking along.  

Talking a good game doesn't mean crap to me...but to a lot of people throwing out a few good words about hope and unity really makes their day.  I mean, other than all the rhetoric, how is Obama's platform really that different from Hillary's??  It's not.  So, people tend to be voting more for an attitude, than his actual platform.  --Of course, the "tax the hell out of the rich" platform is always popular to a certain degree, but the key here lies in how you define "rich".  Is rich making $40,000+ a year?  Or is rich making $500,000+ a year?  ...the last that that I want to do is to work my way up to being "wealthy" only to get taxed to the point that I was better off making less money. 

sorry for the rant. but there's my two cents on politics.

Excellent questions.  This kind of thing makes me boil for many reasons.  I don't think Obama himself knows ow he would define high income.  The fact that Obama's quote is - to paraphrase - "Warren Buffett thinks it's ok to raise the cap gains rate" indicates how out of touch he is with "the rich."  To equate Warren Buffet with a middle class family in the New York Metro area making $200,000 is intolerable.  (Interesting that when Warren Buffett wanted to donate part of his fortune to a worthwhile cause, he pledged 10 million shares of class B stock to the Bill and Melinda Gates Foundation, NOT the federal government. ) Buffett has been quoted as saying something like, "the Government should take more from people like me."  Ok Warren, why don't you just write a check if you feel that way.

Yes, increasing cap gains on the perceived "rich" will affect everyone.  Contractors will get fewer jobs, restaurants will be less busy, car dealerships will continue to struggle, on and on.  If Cap gains rates are likely to increase, it will not change my Tradeking behavior since this is all short term gains at my marginal rate anyway.  For my other taxable stock investments, I will plan on selling quite a lot, and putting money into state and federal tax free municipal bonds.  My own little "Atlas Shrugged."

A lot of people talking about stuff they don't understand.

I particularly like the "liberal" versus "conservative" comment. What the heck doesn't that even mean? "Tax and spend" the old Republican mantra. Republicans are supposed to be the pro business party, well guess what that don't mean you. It means the CEO of EXXON that got a bonus when he retired that amounted to $150,000 for every day he was there. That was just the bonus.

Well I lost some friends in Iraq and I know what that means. I don't want to lose anymore.

Now we have the oil companies moving back in. Well I guess we know what the point is now.

Tax revenue's gotta come from somewhere.  Better capital than labor.

Tax revenue's gotta come from somewhere.  Better capital than labor.

Tax revenue's gotta come from somewhere.  Better capital than labor.

I think that my trading is "labor" of a sort.  It's no more or less of a labor than sitting in front of a pc at work all day is.  The whole issue here is how does Obama define "the rich".  ???  Like I said, is he talking about taking another swipe out of my paycheck every month AND taxing my trading gains?  Or is he just planning on taking a few million out of the oil CEO's pocket.  My fear is that he wants the CEO's money, my paycheck, and the capital gains. 

I've been debating doing an Iraq war / oil profits post for a while, and maybe Jim Jackson and a few of the other comments here have given me the guts to do so.  We shall see.  I try to avoid purely political posts, so if I do one, I'll try to work economic thoughts in there as well.  (I don't think the Iraq war is about oil.  There are much easier ways for the ultra-wealthy to make money than by going to war.) 

Well, what do you want?  The days of the free lunch, when the United States could freely and recklessly spend outside its means to the tune of hundreds of billions of dollars a year, appear to be winding down.  Either we cut the hell out of spending (which I'm not against, but it isn't wise in a recession) or raise taxes.  You have to pick one, keeping in mind that the biggest pork comes from the military, and there are few who'd want to cut back there.

And when it comes to raising taxes, if the choice is between the guy gambling on his computer (i.e. you or I) or a guy swinging a sledgehammer, I'll pick the speculator every time. 

True - tax revenue has to come from somewhere, but you need investment capital in order to have labor.

I think the additional revenue Obama thinks might be raised by raising the capital gains tax won't be nearly as much as he thinks because people will sell their investments at the lower rate months before the new rate takes effect and future investment growth will slow.   Not exactly great timing for this with the economy in the shape it's in.

The additional revenue Obama may think will be raised by increasing the capital gains tax could easily be matched or exceeded by cutting out all the crap and wastefull government spending.

Unfortunately, at some point in the future,  taxes will need to be raised significantly regardless if a Republican or Cemocrat is in the White House.   We have to pay back our debt somehow.  I'm not even gonna get into Social Security or Medicare.

Hey MPC,   I guess it depends what you consider a speculator.  I think raising the capital gains tax will hurt speculators the least.   It's my opinion that many speculators are usually in and out of a stock in days/weeks/or a month or two so this doesn't really apply to them anyway.   The people who've held on to their investments for a year or more, that's whose going to get hit.  

By raising the capital gains tax,  I would think you're actually encouraging more short-term speculative trading since there will be less incentive to hold on to an investment for a year or longer.

mpc220, I don't mind paying taxes, I just don't want to pay more than I "should" have to in order to support an inordinate amount of social programs or increasing a bloated, wasteful federal government. 

In my youth, I was the beneficiary of several federal programs, and I was glad that they were in effect.  However, I've also seen the bad side of many of those programs, and support moderation in public support of individuals, rather than increasingly becoming a "social welfare" state. 

If you want to fix the problem with tax dollars, you set the tax rate at a flat rate. Exemption for low end at or around the current personal exemption, and maybe even bump that up a bit to match the poverty line and every one else pays 25% across the board. No loopholes!

It's a start and should generate more tax revenue...let the name calling begin!

corbin2,

I am with you for a flat tax or a consumption tax.  It is the private economy that produces wealth and many taxes either punish industrius people, or discorage capital formation.  Cutting taxes has been proven on a number of occassions to create more wealth which generates higher tax revenue for government spending.

Corbin2  - I also for some type of flat tax across the board.   Or,  how about getting rid of income taxes all together and having a national sales tax instead.

 $abundance,  I couldn't agree more with both of your comments. 

Um, how many people here does this actually affect? I assume most people here rarely hold onto something longer than a year unless it's in their retirement account. I've seen a breakdown of how much is not in retirement accounts and held longer than a year, and almost all of it is held by people that are rich by any stretch of the imagination (I'll try to find it again).

 I've never understood why taxes are different for holding onto something for a long time or doing short term speculation. To me that's the real problem. I would prefer it if they changed the tax code to allow $100k per year in gains before taxes regardless of time held as long as the money is not transfered out of the account. Upon taking it out of the account then it could be taxed.