Capital gains surged ahead of U.S. tax increase

Investors took a lot of profit before top rate rose to 23.8%, Obama health care tax took hold

Mar 23, 2014 @ 1:49 pm

U.S. taxpayers claimed 60.4% more in capital gains in 2012 than 2011, locking in lower tax rates before the 2013 tax increase took effect, according to Internal Revenue Service data released last week.

Qualified dividend payments rose 50.9%, according to the preliminary data.

(Don't miss these Top 10 tax tips.)

During 2012, long-term capital gains and qualified dividends were subject to a top rate of 15%. Starting in 2013, the top rate was 23.8%, because of the expiration of some of President George W. Bush's tax cuts and an investment tax in President Barack Obama's 2010 health care law.

Taxpayers' actions mirror what happened at the end of 1986, before a capital gains tax rate increase scheduled to take effect in 1987, said Alan Auerbach, an economist at the University of California, Berkeley.

“Capital gains realizations are extremely sensitive to the timing of tax rate changes,” he said. “I don't think anybody disputes that there's a very, very large timing response.”

The $498.7 billion in capital gains in 2012 were concentrated among the highest-earning households. U.S. taxpayers with more than $250,000 in adjusted gross income received 83% of the net capital gains.

(Bloomberg News)

0
Comments

What do you think?

View comments

Recommended for you

Latest news & opinion

Piwowar defends SEC's best-interest rule

SEC commissioner says the Department of Labor rule set up an 'unworkable, impossible set of standards for people to comply with.'

RIA in a Box acquired by private equity firm Aquiline Capital

New owners plan more growth for the software service provider.

IBDs with the most female reps

Here are the 10 independent-broker dealers that have the most female reps.

Supreme Court decision likely to prevent brokers from filing class-action lawsuits

However, it likely won't bar employees from filing 401(k) lawsuits against their employers.

5th Circuit denies states' second attempt to defend DOL fiduciary rule

The three-judge panel split again, 2-1, in deciding not to take another look at the motion to intervene by California, New York and Oregon.

X

Hi! Glad you're here and we hope you like all the great work we do here at InvestmentNews. But what we do is expensive and is funded in part by our sponsors. So won't you show our sponsors a little love by whitelisting investmentnews.com? It'll help us continue to serve you.

Yes, show me how to whitelist investmentnews.com

Ad blocker detected. Please whitelist us or give premium a try.

X

Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print