sorno

Fear of Higher Taxes a Cause of Sell-off

On Jul 11 06:00 PM icandoitdon wrote:

> let's see...
>
> higher future tax rates stimulate asset sales currently to avoid
> the higher tax rates. as i recall, it's also a republican mantra
> that lower tax rates stimulate asset sales to take advantage of lower
> tax rates.
There is a pitfall in your logic. Lower tax rate gives people more incentive to buy assets at higher price, which is good for the economy (especially current economy). With the same logic, changing from low tax rate to high tax rate decreases assets value, which is bad.
> from this, i would simply conclude that sales and purchases of capital
> assets generally occur regardless of modest changes in tax rates.
>
>
> while it's human nature to want to pay as low a tax rate as possible,
> it is just one variable among many in determining the timing of the
> sale of a capital asset.
It's just one variable doesn't mean it's not a big one. You know why buy-and-hold works? Because comparing to short-term trading, it incurs much lower tax payments.
> your notion that capital asset sales due to a pending increase in
> tax rates are somehow undesirable is simple minded drivel for the
> uneducated masses who believe our government is evil in all things
> except war.
I havn't encounter a person has this kind of thinking. I believe your "uneducated masses" is out of your imagination and it's a way to boost your own ego because you think you are well above the masses.

Fear of Higher Taxes a Cause of Sell-off

The post is pretty superficial, since it basically assumes everyone wants to get out of capital market because of increase in tax. If people pull out money from the capital market, where will they put the money? CD and bonds, which has lower growth and higher tax rate? The sell off in market has nothing to do with potentially increase in tax, it's clearly due to the credit crisis and the slowdown of the economy. The lack of IPOs is also due to the slowdown of the economy. Why do you think people who started a business simply because they want to sell it? I seldom heard people put a sell price in mind when they run their business and if they do, they properly can't run a good business.