The Bush tax cuts were a hot topic these last few weeks between the deal making (extending cuts for all in return and estate tax relief for extended unemployment benefits) and the political dancing, but ultimately something had to be done. While much has been made of the tax brackets themselves, one of the other things that went along with it was the long term capital gains tax rate. They were set to increase from 0% and 15% to 10% and 20%, respectively.
So here’s the question at hand, what if we no longer had favorable long term capital gains rates (and dividend tax rates) and instead all investment gains were taxed as ordinary income? In other words, what if there was no such thing as long term capital gains? What if everything were taxed as short term?
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