Income tax rates will go up for all Americans next month if lawmakers in Washington cannot come to a resolution on the so-called fiscal cliff. Even a deal will likely boost rates on capital gains and dividends, affecting investors in all asset classes.
Capital gains taxes — the tax one pays when selling an investment — are expected to increase to at least 23.8% from the current top rate of 15%. The higher rate includes the 5% tax increase and a new 3.8% tax on investment income (applicable to high-income earners only) to pay for provisions in the president’s Affordable Care Act. The proposed new rate is still historically low; long-term capital gains were taxed at nearly 30% from 1986 through 1997, according to the Tax Policy Center. New York City has the highest capital gains taxes in the country. President Obama would like to raise the dividend tax rate to 39.6% on wealthy Americans (the same rate during the Clinton administration) from 15% -- essentially taxing dividend gains asRead More »from Bill Gross’ Tips for “Beating the Wealth Tax”