Lower Capital Gains Taxes Can Influence Voters

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.

Ways To Take Advantage of Tax Rules

Its almost tax time again this year, a frightening period for many people. How can you make the most out of your tax return this year?

Here are some techniques that may save you some anguish and money when dealing with 2012 tax rates.

  1. Be willing to part with some of your possessions. Tax expert Joseph Thorndike says gift and estates taxes are the lowest they have been in a long time. This is the perfect time to set up a trust for any relatives, or to hand over the reins on a family business.

  2. If you are making money from a hobby, turn it into a business. If you make over 20k with more than 200 financial transactions, you will get a 1099-k. If you count is a business, you are allowed superior deductions.

  3. Pay your deductions early. There’s a chance that the limits on itemized deductions are going to be lowered in the next few years. If you can pay real estate taxes ahead of time you could end up saving some substantial money.

  4. Use the benefits of the zero percent capital gains tax. It can be used up until 2012 if you are in a lower income tax bracket. If you declare your investment gains now, rather than later, you will be paying less.

  5. If you are selling anything major like a business or real estate, or other major asset, see if the buyer can pay in full. This way you will end up paying less on capital gains tax. If you have to, try and negotiate a lower rate with your buyer, or to pay the cost of refinancing. It will shrink your short term profit, but you will be be making more overall.