# Does Kerry want to raise the capital gains tax? **URL:** \ **Category:** Great Debates\ **Created:** [July 29, 2004, 12:49am UTC](https://boards.straightdope.com/t/does-kerry-want-to-raise-the-capital-gains-tax/257359 "2004-07-29T00:49:41Z")\ **Posts on this page:** 20\ **Page:** 1
**Author:** ![BrainGlutton](https://avatars.discourse-cdn.com/v4/letter/b/82dd89/32.png) [@BrainGlutton](https://boards.straightdope.com/u/BrainGlutton)\ **Post date:** [July 29, 2004, 12:49am UTC](https://boards.straightdope.com/t/does-kerry-want-to-raise-the-capital-gains-tax/257359/1 "2004-07-29T00:49:41Z")
A stockbroker friend of mine insists that every time Kerry moves up in the polls, the stock market dips, because Kerry wants to raise the capital gains tax and that frightens investors. But I can’t find anything about that on his campaign website ([http://www.johnkerry.com/index.html](http://www.johnkerry.com/index.html)). Has anybody else heard anything about this? ---
**Author:** ![jshore](https://avatars.discourse-cdn.com/v4/letter/j/b5e925/32.png) [@jshore](https://boards.straightdope.com/u/jshore)\ **Post date:** [July 29, 2004, 2:53am UTC](https://boards.straightdope.com/t/does-kerry-want-to-raise-the-capital-gains-tax/257359/2 "2004-07-29T02:53:23Z")
The question is a bit confusing because I believe that right now the cut in the capital gains and dividends taxes that was passed last year is set to expire at some point in the future. (This was done in order to keep the projected cost of the tax cuts down to a level that was acceptable to those Republican moderates in the Senate who still thought that one had to pay at least a little passing attention to fiscal responsibility.) So, the question would probably be whether Kerry favors letting them expire or whether he wants to make them permanent, a question to which I do not have a definitive answer at the moment. As to what the stock market reacts to, most people are better at seeing patterns than the patterns are at actually being there. And, in fact, while Republicans like to think of themselves as the stock-market-friendly folks, I think that there are some who have produced evidence that the stock market has done better under Democratic Presidents than Republicans. Whatever! ---
**Author:** ![jshore](https://avatars.discourse-cdn.com/v4/letter/j/b5e925/32.png) [@jshore](https://boards.straightdope.com/u/jshore)\ **Post date:** [July 29, 2004, 3:01am UTC](https://boards.straightdope.com/t/does-kerry-want-to-raise-the-capital-gains-tax/257359/3 "2004-07-29T03:01:17Z")
For reference, [here](http://www.washingtonpost.com/ac2/wp-dyn?pagename=article&node=&contentId=A33202-2003May23¬Found=true) is the Washington Post article on the passage of the 2003 tax cuts. Here is some of what they said about the dividend and capital gains tax cuts in particular and the sunsetting in general: > [@](#): > > Indeed, by “sunsetting” all the tax cuts well before the bill’s official 2013 expiration date, congressional tax writers took a measure that otherwise would have cost the Treasury more than $800 billion over the next decade and crammed it into a $350 billion price tag that could garner just enough support to pass the Senate. Democrats and Republicans alike predict that future Congresses and administrations will not let the tax cuts expire. > > … > > The bill will expand tax breaks for businesses that invest in new plants and equipment. Its centerpiece will lower the capital gains and dividend tax rates dramatically. The tax rate on capital gains will drop to 15 percent from the 20 percent rate at which most stock and asset sales are now taxed. Dividends will also be taxed at 15 percent, a dramatic decline, because dividends now are taxed as income, with the lion’s share facing a levy of 38.6 percent. > > For low-income taxpayers, the capital gains and dividend rates will drop to 5 percent, then to zero in 2008. > > … > > Virtually all the tax breaks will be temporary, unless future Congresses extend them…Even the dividend and capital gains cut lasts only five years. ---
**Author:** ![jshore](https://avatars.discourse-cdn.com/v4/letter/j/b5e925/32.png) [@jshore](https://boards.straightdope.com/u/jshore)\ **Post date:** [July 29, 2004, 3:10am UTC](https://boards.straightdope.com/t/does-kerry-want-to-raise-the-capital-gains-tax/257359/4 "2004-07-29T03:10:21Z")
Here is what a Money/CNN articles says in regards to Kerry’s and Edward’s plans for the dividend and capital gains tax cuts that they discussed in the primaries: > [@](#): > > Both have pledged to leave alone the parts of the recent tax cuts that favor the middle class, and both have promised to enforce trade laws and offer incentives for companies to hire U.S. workers. > > But they may also repeal some of the tax cuts that benefited the wealthiest Americans, and may not support the legal reforms the Bush administration favors, meaning a Kerry-Edwards victory in November could be met with grumbles on Wall Street. > > Of course, what Kerry and Edwards would want and what they might get if they win could be two very different things if Republicans maintain control of one or both houses of Congress. > > “I think we should know about candidates’ desires and views, but I think it would be a mistake to assume that they will become reality,” said Sung Won Sohn, chief economist at Wells Fargo. > > … > > [Under Kerry’s Plan,] dividend tax rates would also jump back up to the tax rates of regular income – but Kerry said he would give a dividend and capital gains tax cut to people in the “middle class,” though he has not yet defined what he meant by that (making less than $200,000?) or what sort of cut he’d give. The new tax law cuts the rate on the top four brackets to 15 percent and the lower brackets to 5 percent in 2007 and 0 percent in 2008. > > … > > Edwards had similar ideas, saying he would keep the tax on very large estates, and would raise the top rate on capital gains to 25 percent for families earning more than $350,000, which he said represented less than 1 percent of all Americans. > > Edwards also called for adjusting the tax code so that the top 1 percent pay the same tax rate on investment income that middle-class families pay for their wage and salary income. ---
**Author:** ![jshore](https://avatars.discourse-cdn.com/v4/letter/j/b5e925/32.png) [@jshore](https://boards.straightdope.com/u/jshore)\ **Post date:** [July 29, 2004, 3:11am UTC](https://boards.straightdope.com/t/does-kerry-want-to-raise-the-capital-gains-tax/257359/5 "2004-07-29T03:11:32Z")
Sorry, [here](http://money.cnn.com/2004/07/07/news/economy/election_ticket/) is the cite to that article. This is my last past here for now…Honest! ---
**Author:** ![BoringDad](https://avatars.discourse-cdn.com/v4/letter/b/ad7895/32.png) [@BoringDad](https://boards.straightdope.com/u/BoringDad)\ **Post date:** [July 29, 2004, 4:47am UTC](https://boards.straightdope.com/t/does-kerry-want-to-raise-the-capital-gains-tax/257359/6 "2004-07-29T04:47:54Z")
> [@BrainGlutton](#): > > A stockbroker friend of mine insists that every time Kerry moves up in the polls, the stock market dips, because Kerry wants to raise the capital gains tax and that frightens investors. But I can’t find anything about that on his campaign website ([http://www.johnkerry.com/index.html](http://www.johnkerry.com/index.html)). Has anybody else heard anything about this? **jshore** seems to have the facts covered. I’d say that I sure hope he raises them back to the level of income taxes as indicated. Pisses me off that income derived from actual work is taxed at a higher rate than income derived from owning wealth. Talk about your class warfare! ---
**Author:** ![DanBlather](https://avatars.discourse-cdn.com/v4/letter/d/f4b2a3/32.png) [@DanBlather](https://boards.straightdope.com/u/DanBlather)\ **Post date:** [July 29, 2004, 7:40am UTC](https://boards.straightdope.com/t/does-kerry-want-to-raise-the-capital-gains-tax/257359/7 "2004-07-29T07:40:16Z")
> [@BoringDad](#): > > **jshore** seems to have the facts covered. I’d say that I sure hope he raises them back to the level of income taxes as indicated. Pisses me off that income derived from actual work is taxed at a higher rate than income derived from owning wealth. Talk about your class warfare! Amen! Then add in SS taxes and you have a real regressive situation for low income wage earners. I can’t believe people aren’t up in arms about this. ---
**Author:** ![Gangster\_Octopus](https://avatars.discourse-cdn.com/v4/letter/g/a8b319/32.png) [@Gangster\_Octopus](https://boards.straightdope.com/u/Gangster_Octopus)\ **Post date:** [July 29, 2004, 5:41pm UTC](https://boards.straightdope.com/t/does-kerry-want-to-raise-the-capital-gains-tax/257359/8 "2004-07-29T17:41:53Z")
> [@BoringDad](#): > > **jshore** seems to have the facts covered. I’d say that I sure hope he raises them back to the level of income taxes as indicated. Pisses me off that income derived from actual work is taxed at a higher rate than income derived from owning wealth. Talk about your class warfare! ALthough there is a lot of politcal and “class” reasons for this, one strong economic reason is that capital is most effective when it is liquid and able to move around easily. Capital gains effectively puts a large incentive to keep capital where it is. ---
**Author:** ![catsix](https://avatars.discourse-cdn.com/v4/letter/c/e19b73/32.png) [@catsix](https://boards.straightdope.com/u/catsix)\ **Post date:** [July 29, 2004, 6:01pm UTC](https://boards.straightdope.com/t/does-kerry-want-to-raise-the-capital-gains-tax/257359/9 "2004-07-29T18:01:32Z")
This is just a sort of side question, but why does the government tend to refer to tax cuts as ‘costs’? That would assume that the tax cut is money owned by the government that they are paying out to people, wouldn’t it? ---
**Author:** ![jshore](https://avatars.discourse-cdn.com/v4/letter/j/b5e925/32.png) [@jshore](https://boards.straightdope.com/u/jshore)\ **Post date:** [July 29, 2004, 7:41pm UTC](https://boards.straightdope.com/t/does-kerry-want-to-raise-the-capital-gains-tax/257359/10 "2004-07-29T19:41:52Z")
Well, they refer to it as costs because the government has to budget and in dealing with budgets, this decrease in revenue shows up on the negative side of the balance sheet. In the same way, my company thinks that paying my salary is a cost even though it is simply rightfully giving me the money they agreed to in exchange for my labor. ---
**Author:** ![erislover](https://avatars.discourse-cdn.com/v4/letter/e/71e660/32.png) [@erislover](https://boards.straightdope.com/u/erislover)\ **Post date:** [July 29, 2004, 7:43pm UTC](https://boards.straightdope.com/t/does-kerry-want-to-raise-the-capital-gains-tax/257359/11 "2004-07-29T19:43:39Z")
It is just a way of looking at money, **catsix**. A producer who looked to decreasing the sale price could easily look at a price-cut as a cost when using the current situation as a reference point. If a producer cut the sale price in an attempt to sell more and hence make more profit, but didn’t make more profit, then the price cut cost him money. Doesn’t mean it is “his” money rather than the future buyers’. ---
**Author:** ![erislover](https://avatars.discourse-cdn.com/v4/letter/e/71e660/32.png) [@erislover](https://boards.straightdope.com/u/erislover)\ **Post date:** [July 29, 2004, 7:47pm UTC](https://boards.straightdope.com/t/does-kerry-want-to-raise-the-capital-gains-tax/257359/12 "2004-07-29T19:47:10Z")
**jshore** got peanut butter on my chocolate! ---
**Author:** ![catsix](https://avatars.discourse-cdn.com/v4/letter/c/e19b73/32.png) [@catsix](https://boards.straightdope.com/u/catsix)\ **Post date:** [July 29, 2004, 7:56pm UTC](https://boards.straightdope.com/t/does-kerry-want-to-raise-the-capital-gains-tax/257359/13 "2004-07-29T19:56:16Z")
I guess it just bugs me because it’s my money that I’m keeping that someone else is referring to as a ‘cost’. It stands to reason that it happens everywhere, but it’s just not usually so vocalized. Anyway, carry on with the debate. ---
**Author:** ![jshore](https://avatars.discourse-cdn.com/v4/letter/j/b5e925/32.png) [@jshore](https://boards.straightdope.com/u/jshore)\ **Post date:** [July 29, 2004, 9:34pm UTC](https://boards.straightdope.com/t/does-kerry-want-to-raise-the-capital-gains-tax/257359/14 "2004-07-29T21:34:00Z")
> [@catsix](#): > > I guess it just bugs me because it’s my money that I’m keeping that someone else is referring to as a ‘cost’. Well, it is only really your money if you live on a desert island and don’t take advantage of government services. Otherwise, you have to pay the fees associated with living in our society because it ain’t money that you earned in a vacuum. ---
**Author:** ![BoringDad](https://avatars.discourse-cdn.com/v4/letter/b/ad7895/32.png) [@BoringDad](https://boards.straightdope.com/u/BoringDad)\ **Post date:** [July 30, 2004, 4:03am UTC](https://boards.straightdope.com/t/does-kerry-want-to-raise-the-capital-gains-tax/257359/15 "2004-07-30T04:03:34Z")
> [@Gangster Octopus](#): > > ALthough there is a lot of politcal and “class” reasons for this, one strong economic reason is that capital is most effective when it is liquid and able to move around easily. Capital gains effectively puts a large incentive to keep capital where it is. Yeah, that is all nice in theory. In practice it amounts to tax beaks for those who have large amounts of wealth. In theory, providing government funded health care would boost the economy by allowing workers to take more risks starting new businesses, but you don’t see the Republicans proposing that. ---
**Author:** ![BoringDad](https://avatars.discourse-cdn.com/v4/letter/b/ad7895/32.png) [@BoringDad](https://boards.straightdope.com/u/BoringDad)\ **Post date:** [July 30, 2004, 4:07am UTC](https://boards.straightdope.com/t/does-kerry-want-to-raise-the-capital-gains-tax/257359/16 "2004-07-30T04:07:29Z")
> [@catsix](#): > > This is just a sort of side question, but why does the government tend to refer to tax cuts as ‘costs’? > > That would assume that the tax cut is money owned by the government that they are paying out to people, wouldn’t it? To put a slightly different spin on **jshore** ’s response… the government has already spent those taxes that they had planned to levy on you. That money already belongs to the government’s creditors. It is only a question of when they come get it from you. Bush decided to gather this money by increasing the Birth Tax. ---
**Author:** ![Shade](https://avatars.discourse-cdn.com/v4/letter/s/2bfe46/32.png) [@Shade](https://boards.straightdope.com/u/Shade)\ **Post date:** [July 30, 2004, 12:52pm UTC](https://boards.straightdope.com/t/does-kerry-want-to-raise-the-capital-gains-tax/257359/17 "2004-07-30T12:52:16Z")
Well, it wouldn’t be necessary for him to have SAID it. It’s entirely possible that everyone thinks that everyone thinks that repub=cgt-reducing and dem=cgt-increasing, and trading accordingly, and hence the stock market dipping appropriately. Regardless of what anyone DOES think, what Kerry will do, what Kerry is likely to do, or what he’s said. Am I too cynical? I just assumed that mentioning an issue like this could not gain any votes so neither candidate would say anything, but just hint that they would be nice. ---
**Author:** ![Ludovic](https://avatars.discourse-cdn.com/v4/letter/l/7ab992/32.png) [@Ludovic](https://boards.straightdope.com/u/Ludovic)\ **Post date:** [July 30, 2004, 1:09pm UTC](https://boards.straightdope.com/t/does-kerry-want-to-raise-the-capital-gains-tax/257359/18 "2004-07-30T13:09:30Z")
> [@jshore](#): > > Well, it is only really your money if you live on a desert island and don’t take advantage of government services. Otherwise, you have to pay the fees associated with living in our society because it ain’t money that you earned in a vacuum. This should be a sticky. ---
**Author:** ![Ludovic](https://avatars.discourse-cdn.com/v4/letter/l/7ab992/32.png) [@Ludovic](https://boards.straightdope.com/u/Ludovic)\ **Post date:** [July 30, 2004, 1:11pm UTC](https://boards.straightdope.com/t/does-kerry-want-to-raise-the-capital-gains-tax/257359/19 "2004-07-30T13:11:52Z")
I’ve also heard it said that both can be true…it’s possible Dems are worse for business AND that the market does better under Dem. presidents. It would involve the market being SO pessimistic about the incoming president that, while not doing very well, nonetheless beats the lowered expectations, producing a rebounding market. ---
**Author:** ![catsix](https://avatars.discourse-cdn.com/v4/letter/c/e19b73/32.png) [@catsix](https://boards.straightdope.com/u/catsix)\ **Post date:** [July 30, 2004, 1:57pm UTC](https://boards.straightdope.com/t/does-kerry-want-to-raise-the-capital-gains-tax/257359/20 "2004-07-30T13:57:55Z")
> [@](#): > > **jshore** said: > Well, it is only really your money if you live on a desert island and don’t take advantage of government services. Yeah, this is why the government’s attitude toward a tax cut bothers me. Because they (and you) will tell me that the money I worked to earn automatically belongs to someone else. If I could pay the government by the piece, my share for the services I use, I’d do it that way. As it is right now, however, the government feels entitled to money to pay for services I don’t use and then looks at me like ‘well it wasn’t yours in the first place even though you earned it’ if I don’t like that. That and their insistance upon taxing money that has already been taxed (inheritance tax, taxing money I make in the stock market on stocks I purchased with my already taxed paycheck), it kind of irritates me. It also irritates me when local government enacts a tax that was voted down by the people so they can build a couple stupid ass stadiums to subsidize the pro sports teams that wouldn’t pay rent on their old stadiums. [Next page](https://boards.straightdope.com/t/does-kerry-want-to-raise-the-capital-gains-tax/257359.md?page=2)