Notes From the Fieldby Martin Weil

November 4, 2013

A Shot Across The Bow?

Bill Gross in his most recent monthly Scrooge McDucks joins Stan Druckenmiller (formerly of Soros’ Quantum Fund) and Warren Buffett in calling for the end of the preferential tax rates for capital gains. Saying that the widening income disparity in the US is crushing the investment required for America’s future, Gross argues that the lower rates levied on capital vs. labor income are a major cause of our stagnant growth.

While an increase in any income tax rate would seem highly unlikely in today’s environment in Washington DC, political winds can and do change. Such a development would have obvious implications for those holding securities with sizable embedded long term gains. And it would also change the calculus of the expected after-tax return on stocks versus bonds.

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