Every so often, a politician commits the horrible mistake of saying what he really thinks. This happened at the Democratic debate. Barack Obama has a very punitive proposal to nearly double the capital gains rate. When asked by one of the moderators whether this makes sense, especially given the historical evidence of big “Laffer-Curve” effects, Senator Obama dismissed concerns about falling revenue, arguing that a high rate was justified by “fairness.” In other words, Senator Obama is so fixated on punishing success that he is even willing to reduce the amount of tax revenue flowing to Washington that he and his buddies can redistribute.
Obama's capital gains tax hike hits the stock market in the gut:
First, not just the wealthy own stocks in this country Mr. Obama. I am hardly wealthy, but I own stock outside of my retirement vehicles.
Second, those regular folk who have IRAs and 401ks *will* be affected by this tax hike. Not by paying the taxes, but by suffering the market losses that will occur when this plan is passed. Not to mention the wider effect on the overall economy.
What do you think is going to happen between the time legislation is introduced and it would receive the signature of the President (no matter whom)? The market is going to drop. Individuals, corporations, investment houses, etc are all going to lock in gains that they have on their stock positions at the lower tax rate. This will have the overall effect of causing the market to go down.
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