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Delaying Tax Vote Could Crash Stock Market

American

American

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By Paul Bedard
Posted: December 2, 2010
Failure by Congress to extend the Bush tax cuts, especially locking in the 15 percent capital gains tax rate, will spark a stock market sell off starting December 15 as investors move to lock in gains at a lower rate than the 20 percent it would jump to next year, warn analysts.
While it is unclear how bad the sell off could be, it could wipe out the year's gains, they warn.
"Capital gains tax rate will increase from 15 to 20 percent if the tax cuts are not extended. The last time the capital gains tax rate increased--on Jan. 1, 1987 from 20 to 28 percent--investors realized their gains at the lower tax rate," said Daniel Clifton at a Washington partner at Strategas Research Partners. "We would expect a similar effect this time around as investors see the tax rate going up and choose to realize their gains and incur the 15 percent tax."
In a memo to clients, Clifton says that the date most clients are focused on is December 15th for a deal in Congress before beginning to sell. One reason: Many stock options expire that day and investors have to act.
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This should be a wake up call to every lover of American liberty that we need to put the Democrats out of business permanently. There is not doubt that their behavior for last two years, and especially after the latest election, they have no love for their country. The lying, the corruption and the disrespect for the vote; they need to go. They know that this can happen, and want everyone's retirement to get ****ed up, so they can hash more savior plans to make people dependent on government.
 
American said:
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This should be a wake up call to every lover of American liberty that we need to put the Democrats out of business permanently. There is not doubt that their behavior for last two years, and especially after the latest election, they have no love for their country. The lying, the corruption and the disrespect for the vote; they need to go. They know that this can happen, and want everyone's retirement to get ****ed up, so they can hash more savior plans to make people dependent on government.
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Even if the scheduled increase in the capital gains tax rate does take place, a crash really isn't likely. There will be portfolio shifting (away from low-return stocks and those with speculative outlooks). High return stocks that would continue to produce net appreciation even after considering the tax rate change would not suffer much.

Going back to the larger increase to which Mr. Clifton referred, the Dow rose 22.6% in 1986. In the weeks before the capital gains tax rate increase, the Dow sold off 3.0%. However within the first two days in January 1987, it more than made back those losses.

Overall, some kind of sell-off would probably be more likely than not, but a crash is not likely. Given the weaker macroeconomic situation today than in 1987, it might take somewhat longer for the market to reverse the losses that occurred in any pre-captital gains tax rate hike sell-off.
 
donsutherland1 said:
Even if the scheduled increase in the capital gains tax rate does take place, a crash really isn't likely. There will be portfolio shifting (away from low-return stocks and those with speculative outlooks). High return stocks that would continue to produce net appreciation even after considering the tax rate change would not suffer much.

Going back to the larger increase to which Mr. Clifton referred, the Dow rose 22.6% in 1986. In the weeks before the capital gains tax rate increase, the Dow sold off 3.0%. However within the first two days in January 1987, it more than made back those losses.

Overall, some kind of sell-off would probably be more likely than not, but a crash is not likely. Given the weaker macroeconomic situation today than in 1987, it might take somewhat longer for the market to reverse the losses that occurred in any pre-captital gains tax rate hike sell-off.
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the real slap is going to be on people who worked hard and invested and no longer are working and will see taxes on their dividends go up well over 100%
 
TurtleDude said:
the real slap is going to be on people who worked hard and invested and no longer are working and will see taxes on their dividends go up well over 100%
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well then perhaps they should get off their lazy buts and get back to work. So they wont have to pay as much in taxes
 
Lord Tammerlain said:
well then perhaps they should get off their lazy buts and get back to work. So they wont have to pay as much in taxes
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that is one of the most stupid things I have seen on this board.

if they work that will be taxed at 40% thanks to your dem masters
 
TurtleDude said:
the real slap is going to be on people who worked hard and invested and no longer are working and will see taxes on their dividends go up well over 100%
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I agree. But I was only commenting that a tax policy-driven stock market crash is not likely.
 
American said:
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This should be a wake up call to every lover of American liberty that we need to put the Democrats out of business permanently. There is not doubt that their behavior for last two years, and especially after the latest election, they have no love for their country. The lying, the corruption and the disrespect for the vote; they need to go. They know that this can happen, and want everyone's retirement to get ****ed up, so they can hash more savior plans to make people dependent on government.
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So it would start declining in the last couple weeks in December, then bounce right back in January. I'm not seeing how that "****s up everyone's retirement," unless you were already planning on withdrawing your entire life savings from the stock market in the last two weeks of December and couldn't possibly wait a couple weeks longer. :roll:
 
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Lord Tammerlain said:
well then perhaps they should get off their lazy buts and get back to work. So they wont have to pay as much in taxes
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yeah. darn retirees; thinking that they should enjoy what they have earned rather than greeting at walmart....
 
donsutherland1 said:
I agree. But I was only commenting that a tax policy-driven stock market crash is not likely.
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i don't doubt we could see a sell-off of items that folks were looking to cash in on soon anyway; but a crash? i would doubt it.
 
And the award for most ridiculously sensationalist, hyperbolic thread of the day goes to.....
 
American said:
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This should be a wake up call to every lover of American liberty that we need to put the Democrats out of business permanently. There is not doubt that their behavior for last two years, and especially after the latest election, they have no love for their country. The lying, the corruption and the disrespect for the vote; they need to go. They know that this can happen, and want everyone's retirement to get ****ed up, so they can hash more savior plans to make people dependent on government.
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Talk about your over the top hyperbole!!!!
 
TurtleDude said:
that is one of the most stupid things I have seen on this board.

if they work that will be taxed at 40% thanks to your dem masters
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Why should a person's income from dividends be taxed at a lower rate then a persons income from actually being productive.
 
Lord Tammerlain said:
Why should a person's income from dividends be taxed at a lower rate then a persons income from actually being productive.
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When people support flat taxes, they're actually supporting regressive taxation, since the wealthy get a larger percentage of income from capital gains, which is taxed at a lower rate.

I guess they think they deserve it because they think they work harder or something.
 
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Lord Tammerlain said:
Why should a person's income from dividends be taxed at a lower rate then a persons income from actually being productive.
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because dividends are double taxed.
 
Deuce said:
When people support flat taxes, they're actually supporting regressive taxation, since the wealthy get a larger percentage of income from capital gains, which is taxed at a lower rate.

I guess they think they deserve it because they think they work harder or something.
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maybe it is because under a flat tax the rich will still pay more than they use

there is just as sound a reason to say those who pay huge amounts of tax should be taxed at a LOWER rate. Bill Gates at 10% still pays thousands times more taxes than someone making 85K a year and he doesn't use thousands times more services.
 
TurtleDude said:
maybe it is because under a flat tax the rich will still pay more than they use

there is just as sound a reason to say those who pay huge amounts of tax should be taxed at a LOWER rate. Bill Gates at 10% still pays thousands times more taxes than someone making 85K a year and he doesn't use thousands times more services.
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And a whole boatload less than they pay today. Why else would you be pushing this like a broom on a dirty factory floor?

you keep confusing taxes with your grocery cart at a supermarket. You really ned a Govt 101 textbook.
 
haymarket said:
And a whole boatload less than they pay today. Why else would you be pushing this like a broom on a dirty factory floor?

you keep confusing taxes with your grocery cart at a supermarket. You really ned a Govt 101 textbook.
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YOu are in no position to pretend to know more about the government than I do. ANd Yes the rich should pay less.

the rich pay too much and people like you and your party win elections by telling the envious that the rich ought to pay more while they should get more handouts from the government.

I guess you haven't figured it out

your side wins by telling people that their lot in life is the fault of others and those others need to be punished for the failures of those who vote for dem elites. My side wins when most people or a majority want to win and succeed. When people want to make it to the top and they don't want to get screwed when they get there

and tell me what is better for this nation-a majority of the citizens working hard and smart to become winners or a majority whining that they cannot make it because the "rich" are holding them down and they ought to lie back and suckle on the government teat since trying hard won't get them anything
 
from Turtle dude on his grocery cart mentality of taxation

YOu are in no position to pretend to know more about the government than I do.
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Your own posts demonstrate to all here that you have no concept what taxation is, its uses, and its purposes. You continue to whine about not getting what you pay for as if this is Costco and you pay for what you fill your cart with. As long as you keep singing that same tune it is Y...O...U who are telling everyone you have no accurate concept of government taxes.
 
haymarket said:
from Turtle dude on his grocery cart mentality of taxation



Your own posts demonstrate to all here that you have no concept what taxation is, its uses, and its purposes. You continue to whine about not getting what you pay for as if this is Costco and you pay for what you fill your cart with. As long as you keep singing that same tune it is Y...O...U who are telling everyone you have no accurate concept of government taxes.
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LOL you taught government to high school kids. Tell me your training in say tax law.

oops
 
American said:
link


This should be a wake up call to every lover of American liberty that we need to put the Democrats out of business permanently. There is not doubt that their behavior for last two years, and especially after the latest election, they have no love for their country. The lying, the corruption and the disrespect for the vote; they need to go. They know that this can happen, and want everyone's retirement to get ****ed up, so they can hash more savior plans to make people dependent on government.
Click to expand...

Yes, I agree.

A one party "final solution" dictatorship is what this democracy needs.

Round up the liberals and put them in labor camps before it's too late!
 
TurtleDude said:
LOL you taught government to high school kids. Tell me your training in say tax law.

oops
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tell you what Turtle. I will not make a public ass out of myself by attempting to question your occupational skills because I disagree with what you say here despite my never having observed you actually doing your job.

And you can return the courtesy towards me.
 
haymarket said:
tell you what Turtle. I will not make a public ass out of myself by attempting to question your occupational skills because I disagree with what you say here despite my never having observed you actually doing your job.

And you can return the courtesy towards me.
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NO reason to do that. I just know I have more understanding of the tax code and types of taxes than you do given I have litigated tax cases
 
TurtleDude said:
NO reason to do that. I just know I have more understanding of the tax code and types of taxes than you do given I have litigated tax cases
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Let me make this very clear for you Turtle since you did not seem to get it or want to get it the first time. You want to start being bitchy and make snide comments about my teaching ability even though you don't know zip about it simply because you disagree with my position on a political issue here - we can go down that road. Its up to you.

But since you are putting yourself in the position of the Ivy League educated lawyer who knows about tax law, please quote chapter and verse for all of use where in the tax law or code it says anything about each taxpayer being returned exactly what they pay into the system - no more and no less - which is what you are always moaning and crying about.
 
haymarket said:
Let me make this very clear for you Turtle since you did not seem to get it or want to get it the first time. You want to start being bitchy and make snide comments about my teaching ability even though you don't know zip about it simply because you disagree with my position on a political issue here - we can go down that road. Its up to you.

But since you are putting yourself in the position of the Ivy League educated lawyer who knows about tax law, please quote chapter and verse for all of use where in the tax law or code it says anything about each taxpayer being returned exactly what they pay into the system - no more and no less - which is what you are always moaning and crying about.
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you might be a good teacher

what you are not is more educated about taxes than I am.

I am not saying what the tax code is

I am saying what a fair tax code SHOULD BE

learn the difference
 
Lord Tammerlain said:
Why should a person's income from dividends be taxed at a lower rate then a persons income from actually being productive.
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that's a false dichotomy; in both instances the individual is being productive. the main difference that i can see is that one form is taxed twice.
 
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