Today's softness in the equities market is just a pull back due to today's economic #s, and I also believe due to political bipartisanship due to Obama's new proposed tax policy, which I have included some bullet points below. Now, most of this will not get passed as is, but some of this will be very popular with the masses, including the carried interest being taxed as ordinary income. I will go out on a limb and note that there's no way that Congress could pass dividends being taxed as ordinary income. As many know, once a company has paid out a dividend, it's already been taxed at the corporation's tax rate, so by taxing it again to an individual in the highest tax bracket, you will in effect have taxed that company's profit at close to 50%, which makes dividends not and economical use of capital deployment for corporations. This unintended consequence could ultimately result in a decline in dividends from corporations.
• Top individual income tax rate of 39.6%, starting in 2013 (up from 35%)
• Long- term capital gains top rate of 20%, up from 15%.
• 3.8% tax on unearned income of couples earning $250,000 or more; individuals making$200,000 — is to take effect in 2013 to pay for the 2010 health- care reform law.
• Dividends are treated like ordinary income. Top Federal bracket for some taxpayers = 43.4% (including dividends). Top dividend tax rate is now 15%
• The AMT is replaced with a 30% minimum tax for individuals with annual incomes of at least $1 million.
• The Carried Interest option benefiting hedge fund managers and private equity managers moves to ordinary income rates instead of a preferential 15%
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