Friday, May 28, 2010
Tax Rate Expirations
"The current top capital gains rate of 15% is set to rise to 20% in 2011. Next January also heralds both the expiration of capital gains treatment for dividends, returning them to ordinary income rates, and the return of a top 39.6% income tax bracket, up from 35%. This means that for 2011, dividend income could be subject to a federal tax rate of 39.6%, and in 2013, 43.4% (top income tax bracket of 39.6% plus 3.8% investment income tax). Likewise, in 2013, capital gains may be taxed at a top rate of 23.8%. There has been movement in Congress to maintain the capital gain and dividend rates at 15% for those with incomes under $250,000 (joint return) and $200,000 (single)." WTAS
Major tax increases are coming. Major. I cannot imagine how this is going to be a positive for the equity or credit markets. I just read the top income bracket in New York City will be paying over 52% total federal, state and local. California is giving tax refunds in the form of IOUs? NY is weeks away from running out of cash. We are already in a state budget crisis. There is going to be a battle between these three taxing bodies for dollars.