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View Diary: The oft-repeated lie about the capital gains tx preference (74 comments)

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  •  Thanks. (4+ / 0-)
    Recommended by:
    weck, elwior, ozsea1, Nailbanger

    So the actual quote is even worse than I remembered.

    •  jmcb - I read that as a statement that stocks (3+ / 0-)
      Recommended by:
      johnny wurster, weck, ItsSimpleSimon

      valued on the basis of their dividend yield will face selling pressure if the tax rate on dividends goes from 15% to 42% (39% + 3% medicare tax). Isn't that true?

      "let's talk about that"

      by VClib on Sun Dec 02, 2012 at 02:04:13 PM PST

      [ Parent ]

      •  definitely. (2+ / 0-)
        Recommended by:
        weck, VClib

        we're advising that people get the hell out of high yield stocks if the rates go to ordinary.

        •  then what is her warning about then? (0+ / 0-)

          is she making some claim this shift in investments  will hurt the economy by disfavoring essential corporations?
            I guess knowing which types of companies pay dividends and how they will be 'hurt' by this compared to companies whose stocks are desireable because of stock value increases (because they take risks and are 'cutting edge' and don't declare dividends maybe?)
          Is she saying this will cause stock investments to be shifted to riskier stocks and cause losses and economic instabilty...or is she just trying to scare middle class people with a few stocks via IRAs etc.?

          of course..it is way easier to say whatever she says is bullshit to serve her Masters on Wall Street, but...

          This machine kills Fascists.

          by KenBee on Sun Dec 02, 2012 at 02:58:31 PM PST

          [ Parent ]

      •  Does the market have good information? (2+ / 0-)
        Recommended by:
        ozsea1, Nailbanger

        First, Medicare tax is not an issue.

        The point of the diary is that these people who want to preserve the preference for cap gains and dividends like to infer that increasing that tax will be a tax increase on most middle class families with stock market investments in qualified accounts.  It is just not true.

        The value of publicly held companies depends on many factors.  Dividend yield is just one.  For all those people who own a stock directly or indirectly in a qualified account (401k), an increase in the dividend tax rate makes no difference. So any impact of valuation is very likely negligible.

        •  jmcb - I don't think that's the point (2+ / 0-)
          Recommended by:
          johnny wurster, valion

          I agree with you that most middle class investors own stocks in tax sheltered vehicles so that the tax changes don't have the same impact as taxable accounts. I think the point is that certain stocks, like utilities, are priced primarily on yield rather than the other metrics that commonly influence share price. The tax rate on dividends does impact the economic value of high yield stocks to tax paying entities like individuals, and some mutual funds, and prices will adjust to the new after tax yields. If any of these securities are held in tax exempt accounts there is no tax impact, but the lower expected value for those stocks can reduce portfolio value. In summary higher taxes on dividends put downward pressure on high yield stocks and anyone who owns them, in a taxable or tax-free account, should think about adjusting their portfolio.  

          "let's talk about that"

          by VClib on Sun Dec 02, 2012 at 03:18:06 PM PST

          [ Parent ]

        •  Medicare tax raises the tax on dividends, (2+ / 0-)
          Recommended by:
          divineorder, VClib

          cap gains, etc.  its a new 3.8% tax on investment income.

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