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Affluent OK with Dems Raising Capital Gains Tax

Ignore what the right wing blogosphere is telling you about the dire consequences of the Democratic proposals to raise the capital gains tax -- as usual they are just trying to scare you into voting for their candidate.

This just out:

Affluent investors say a small increase in the capital gains tax, as suggested by Democratic presidential candidates Barack Obama and Hillary Clinton, wouldn't affect their investment decisions.

According to the annual Bloomberg/Los Angeles Times investor poll, 69 percent of upper-income investors say a raise in the capital gains tax to 20 percent from 15 percent wouldn't cause them to sell assets they would otherwise hold.

During the presidential campaign, both Democratic candidates said they would increase the tax on investment income.

The nation can't continue to rack up debt forever, despite the Bush administrations attempts to the contrary. And Republicans love to counter Democratic proposals with the bleating plea "Yes, but how would they pay for it?"

Henry Lennon, a surgeon and poll participant in Boca Raton, Florida, who gets significant income from investments, says a 5 percentage-point increase isn't enough to make him alter his portfolio.

``I wouldn't sell anything I now hold because all my investments are long-term,'' the 61-year-old Republican voter says.

Clinton has said she's open to increasing the rate on capital gains and dividends modestly, though not higher than 20 percent and only on Americans with income above $250,000. Obama wants the rate to rise from the current 15 percent level, but not to the 28 percent rate that existed under former President Ronald Reagan.

Both candidates claim their proposed changes wouldn't stifle economic growth, while Republican presidential nominee John McCain has said boosting the rate would ``decrease the income of 100 million of Americans'' and ``doesn't make any sense.''

Upper-income investors in the poll tend to side with the Democratic view.

100 million Americans? I think what McCain is doing is citing a figure of 100 million because that many Americans own stock in one form or another, and he's trying to claim that a capital gains tax would adversely effect 100 million Americans.

I don't buy that - and I don't know where he's getting that number. Yes, many Americans own stock, but lots of Americans only own stocks through retirement plans; 401Ks, IRAs, etc - none of which are subject to capital gains tax. And yes, you can end up paying the tax when you sell your home - but 100 million people - sounds like an exaggeration to me.

Regardless, affluent investors are where the bulk of investments reside, and these investors are saying the increases of 5 percent won't impact their decision-making. Would it prevent you from selling your house? Of course not.

Update: I did more digging, and apparently McCain's statement regarding 100 million Americans paying capital gains tax is indeed bullshit. It's already been fact-checked and proven wrong:

McCain's comments imply that 100-million people would see higher tax bills due to capital gains increases. This significantly inflates the number of people who pay capital gains taxes, even at the lower rate. Eric Toder, a tax policy expert with the Urban Institute in Washington, D.C., pointed us to IRS data that show about 16.2-million taxpayers were subject to capital gains taxes in 2005, the most recent year for which data are available. Additionally, most of the gains reported in 2005 -- about 81 percent -- were claimed by taxpayers making $200,000 a year or more, the top 2.7 percent of tax returns. We don't think of them as "policemen, firemen, nurses."

Republicans are lying, as usual...

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