Increase Capital Gains Tax Rates - Discouraging Risky Bets?

The capital gains tax stock rate is either 15 percent or 35 percent, depending on the length of time a stock is held from its purchase date. The longer a gain on a stock investment is held by an investor, the lower the capital gains tax rate that is paid. This provides an incentive for investors to make long term investment decisions, based more on a buy-and-hold strategy rather than flipping stocks in the market for quick profits.

The Benefits of Long Term Investing

Longer term investments in stocks are beneficial to businesses and the economy. The longer a stock investment held means that businesses have a longer use of the capital necessary to hire workers, increase product lines and expand physical plants and locations. This expansion provides additional tax revenues and benefits a community and society as a whole.

Increasing Short Term Capital Gains

Increasing short term capital gains tax rates from 35 percent to 50 percent may be a way to further discourage short swing profits made by individuals buying and selling stocks on a constant basis. It may also provide a disincentive for individuals who engage in the creation or speculation of stocks in the form of risky security derivatives. Higher capital gains tax rates, particularly on stock investments held less than 1 year may provide a way to fuel an economic recovery and equitably distribute wealth in America.

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