Will The Market Sell Off ?

Late yesterday, the House of Representatives passed a bill that would extend the tax cuts,
but only for Americans earning less than $250,000.00 per year. That would unfortunately, do
nothing to prevent the impending collapse of the markets as dividend and capital gains taxes
on the wealthy will cause a massive selloff at some point this month, if those those tax
increases are allowed.

Meanwhile, employers across the nation are wondering how much money they should withhold from
employees’ paychecks just four weeks from now.

The IRS is dithering on issuing its new withholding tables — which usually come out in
mid-November. Payroll departments need two or three weeks to plug the data into their computers.

What if nothing happens by, say, Dec. 15 ? We’ll see one doozy of a stock market

“Capital gains tax rate will increase from 15% to 20% if the tax cuts are not extended”, says
analyst Daniel Clifton of Strategas Research Partners. “The last time the capital gains tax
rate increased — on Jan. 1, 1987, from 20% to 28% — investors realized their gains at the
lower tax rate.”

Clifton says many of his clients will decide whether to hold on or sell by Dec. 15 — a week
from next Wednesday. That’s the last day to trade stocks before index options cease trading
in advance of options-expiration Friday.

If Congress doesn’t act, investors will.

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