Tags: Siegel | capital | gains | tax

Wharton’s Siegel: Fear of Capital Gains Hikes Has Pressured Stocks

Tuesday, 20 Nov 2012 08:52 AM

By Dan Weil

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The Standard & Poor’s 500 has dropped 3 percent since the election because of the fear of a capital gains tax increase, says Jeremy Siegel, professor of finance at the University of Pennsylvania’s Wharton School.

“I think a lot of people with capital gains have been locked in, saying, ‘I’m going to take them under 15 percent instead of 23.8 percent,’” Siegel said.

In other words, people have been selling their stocks to make sure their gains are taxed at the lower rate.

Editor's Note: The Final Turning Predicted for America. See Proof.

If Congress doesn’t act before Jan. 1, the long-term capital gains tax rate will rise to 20 percent from 15 percent currently. A 3.8 percent investment tax also will be imposed next year on people with annual income of more than $250,000 to help finance the healthcare reform law.

Business owners and investors are taking a number of steps to deal with all the tax increases that will ensue if the government jumps off the fiscal cliff.

For example, Wynn Resorts is paying out a special $750 million dividend Tuesday. Without action by the government, the top tax rate on dividends will rise to 39.6 percent Jan. 1 from 15 percent currently.

Others are selling their business. “I’ve never seen such a flood of desire and action to transfer a business and cash out,” Kenneth Bezozo, a partner in the law firm Haynes and Boone, tells The New York Times.

Editor's Note: The Final Turning Predicted for America. See Proof.

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