Capital gain tax might rise substantially after the US presidential election. News outlets are reporting that one of the candidates is proposing a suggested capital gain tax increase to 44.6% from the current level of 20%.
Triathlon Partners wants to avoid the fray of the political arena. Instead, our goal is to identify the policies that will have an impact on your financial future, to lessen the negative impact of the policies, and to proactively exploit opportunities that arise. The rumored increase is more than double the current top rate of 20%. To emphasize, an increase of this magnitude will lead to an immediate sell off, as shareholders with unrealized gains will lock in the lower tax rate. The impact will led to a 15-20% correction.
This policy will have unintended consequences and negatively impact the average American more than the uber-wealthly. In truth, an expected captial gain tax increase will alter the behavior of the market. The decision to buy or sell stock will not be based on the perceived value of the stock itself, but rather on post tax value with a 20% tax on the profit today, or a 44.6% tax on the profit tomorrow. Subsequently, simple mathematics will drive the decision. While tax revenues will sky rocket, what will happen to the 401k and pension plan balances of middle class america? Above all, the ensuing market correction will led to significantly lower account values. As a result those that plan to retire within the next 3-5 years will need to delay retirement, to replenish market losses with savings. As well, those that rely on withdrawals from 401k and IRA accounts, will have to significantly curtail spending as the value of their accounts shrink. The higher capital gain tax will penalized those that keep their money invested in the market.
There are two choices, either complain to deaf ears about higher capital gain tax, or instead, contact Triathlon Partners. With this in mind, we create action plans to keep your money in your pocket, and provide for your loved ones and not fund the government's agenda.In the video, Ira discusses the motivational behavior that will drive the market, and what can be done to lessen the impact on your portfolio. Furthermore, this also might present tremendous opportunities, as a doubling tax rates will change the dynamic of the market.
Click on the video link below to watch our YOU TUBE channel, @TriathlonPartners to watch Triathlon TV: Impact of Higher Captial Gain Tax on The Market. Our goal is to engage, educate and empower our clients to make confident decisions that best fit their objectives. Triathlon Partners likes S.TU.F.F., Subcribers, Thumbs Up, Friends and Followers, clicking on those social media buttons are greatly appreciated.
Additional resources
Tax-Apocalypse: Take Control of your Legacy
Triathlon TV: Indexed Universal Life Insurance vs Deferred Taxable Investment
Whole Life: The Devil is in the Details
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