The Banking and Strategy Initiative

Chillin' out till it needs to be funded

US Budget 2013: Has the Capital Gains Tax reached the end of its utility ?

The proposals to a Universal rate of Capital Gains tax almost always at 15 % globally have lasted a decade of Financial Investments that have grown Financial markets 10-fold and in some cases even 100-fold as Europe returns to the den of structured Finance to survive and specifies a transaction tax on securities worried by the seeming lack of ocmmitment fromt he Financial sector to pay back bleeding governments.

Though the Obama government probably does not put the ytax in the same basket, it has decided to propose the rise in Capital Gains tax to 20% from 15% and as soon as the Congress gridlock is lifted in the next 10 years or when Democrats come to power it may likely be adopted , removing the facility of earnigns from Capital Assets to be devoid of repercussions on income tax dues. even Dividends have moved to 39.6% in the Budget proposals Obama of course has been handed the baton as every other rich man suupposed to have scammed the system shows up with some Cayman Islands numbers and a 15% tax rate, the second part being the Capital Gains on investments instead of the marginal tax rate.

For the average man on the street who joined employment in the new Century the long standing low rates on Capital Gains have started to make less and less sense as his salaries make him out of reach of Capital market assets and with the real estate boom confounded in 2008 by wary wholesale financing of reused collaterals that burnt any long ranging wealth motives ascribed to Financial markets and contributed significantly to zero budgets in US and Europe in the nineties, releasing more growth and development and providing a non funded way to third world super economies to grow out. Stock compensation has also grown one tentacle too many and despite protestations to their limited utility, did contribute to  a seamless growth globally in the last two decades, and the senseless financing battles unduly ascribbed to fueling of greed from the Financial markets.

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