Stephen Moore, writing in Friday’s Wall Street Journal:
Under Mr. Obama’s plan, which takes effect automatically unless the tax hike is called off, the capital gains tax rate rises to 23.8% from 15%; and small-business profits are taxed at just over 40%, up from 35% now. Selling stocks immediately or pulling profits out of a firm before 2013 can make good business sense, advisers are urging clients.
Another reason to sell now, some economists argue, is that the stock market could tumble if investors become convinced that Mr. Obama will win the election. One of the top analysts on Wall Street, David Malpass, told his clients this week: “The year-end tax increase, which [the Congressional Budget Office] now projects will cost the private sector $5.2 trillion over ten years, is scheduled to hit not only income but also capital through the big tax increases on capital gains and dividends. Increases in the taxation of capital cause a direct and immediate reduction in asset prices, which we think will fall materially if the probability of the tax increase rises.”
Arthur Laffer says the effect of the automatic 2013 tax increase will be to cause “an acceleration of economic activity at the end of this year ahead of the higher tax rates, then a big decline in output in 2013. It’s going to be very bad.”
If Romney is elected and the Republicans control Congress the Obama tax bomb will be averted. How do I know this? Because whatever one thinks of Romney or other Republicans, they do understand something that Obama and his cronies have never understood, or maybe just don’t care about. Romney knows that increasing taxes at this time will result in a recession insuring that these tax increases will bring in less, not more, revenue to the government.
If re-elected, Obama will continue his spending spree to benefit his cronies that has resulted in trillion dollar annual deficits every year he has been president. Such killer deficits will eventually kill America. Republicans get this and won’t want it to happen. Obama either doesn’t understand this, or worse, doesn’t care.
If Romney wins in November one does not need to be a genius to know that asset values will rise, the stock market will take off, and the American economy will start growing again. I don’t know if happy days will be here again, but at least the darkness we now see down the road will begin to lift.