The current capital gains taxes on investment income are fifteen percent. While the taxes on the middle class wages are around thirty-five percent. Mitt Romney admitted recently that he pays only fifteen percent on his total yearly income. The Occupy Wall Street movement has not faded from voters’ memories or the specter of the wealthy one-percent. Romney found himself identified as a member of this affluent group.
There has been serious debate as to whether lower capital gains taxes will help the economy. Top economists do not agree on the effect of lower taxes investment income. Some contend that lower taxes on investment income will generate economic growth. Other studies do not confirm there is a correlation between lower taxes and increased investment activity. Over the years capital gains tax has fluctuated from almost forty percent during the mid-seventies to the present fifteen percent. It is noted that savvy investors will not be deterred from a good investment opportunity, even when there is a higher tax rate. There is no suggestion that a higher investment income tax reduces investment activity.
A down market can shape investment activity, when it comes to the buying and selling of stocks. A major concern of the average American is whether the Romney’s of the world, pay their share of the taxes. High unemployment and a poor economy have the non-investors questioning their higher tax rates and 2012 taxes. Lowering the capital gains tax may not alter the market, but it may influence how people vote.