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Investors Hedging on Tax Increase

In the Wall Street Journal by John D. McKinnon, Ben Levisohn, and Justin Lahart (Looming Tax Increase Coloring Investment Decisions), September 13, 2010 ({FP} pg. A4). Many successful investors are being encouraged to sell oversized positions in anticipation of expiring Bush-era tax breaks. Beginning January 1, 2011 taxes on dividends and capital gains will increase by 5% to 20% for families earning in excess of $250,000. Many financial analysts believe that the tax change may initially hinder financial markets, but a study of the stock-market immediately following the original tax cuts found very little impact on investing. Democrats believe that only 3% of small business owners would be impacted by the changes. Republicans focus more on the large amount of small-business income that would be impacted. (George W. Bush, John Boehner, House GOP Leader, Weyerhaeuser Co., Warner Chilcoyy PLC, Alan Auerbach, professor at the University of California at Berkley, wsjreview.com).



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