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Newsgroups: net.taxes
Subject: For posting in USENET net.taxes
Message-ID: <4324@decwrl.DEC.COM>
Date: Mon, 21-Jul-86 15:02:45 EDT
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Posted: Mon Jul 21 15:02:45 1986
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In reading the tax bill, I find that, for anyone making over like $25K or $30K
per year, the new capital gains rate will be 27%. Now, I see a lot of people say
that this is no big deal, because it is an increase of only 7% from the current
maximum rate of 20%. I'm confused.  If you are a middle-income person in the,
say 33% bracket (you can adjust this for your own) you now pay tax on capital
gains at the rate of .4*.33 = 13.2%.  Thus, for most middle income people, the
new tax law will ABOUT DOUBLE your capital gains rate (27/13.2 `=2). 
Now, we all know that straight interest-producing instruments (money-market
funds, T-bills, and the like) aren't what they used to be, so that currently a
good and heavily used place for significant investment is stocks & bonds
(whether directly or thru mutual funds).  Isn't this going to be quite a blow to
the economy?  I mean, if the middle class has its tax rate on legitimate
investment (as opposed to tax shelters, etc) doubled - what will that do to
savings, investment, the stock market and the like? Have I misunderstood
something here?  Or is this really bad news that the press has overlooked?