Last week I wrote that if “it gets rejected, then stocks could move a lot higher once they see that it’s still possible for the government of this country to do the right thing every once in a while.” That’s just what has happened.
Let me remind you what’s a stake here. It’s even worse than I wrote about last week. I said that the “surcharge” tax to finance this government takeover of private medicine would raise the top income tax rate to 45%. That’s bad enough, but what I didn’t mention is that the “surcharge” would affect capital gains taxes, too. The rate on long-term capital gains is now 15%. If Obama’s plan is enacted, it would jump to 25.6%.
I can’t think of a surer way to destroy the stock market – what’s left of it – than to raise taxes on capital gains. Isn’t it already hard enough to make money in stocks?