Obama Takes Class Warfare To The Next Level With The “Buffet Rule” And A New “Millionaire Tax”: Is A Market Selloff Imminent?
by Tyler Durden
In his increasingly desperate attempts to pander to a population that has by now entirely given up on the hope, and barely has any change left, Obama is going for broke (or technically the reverse) by setting the class warfare bar just that little bit higher. This time around, his targets are millionaires, who according to the NYT are about to see their taxes soar. Or not: nobody really knows if the proposed “Buffett Rule”, affectionately known for crony communist #1, will impact just millionaires income tax, which incidentally is the same as what everyone else is paying, or, far more importantly, their Investment Income, which is where the bulk of America’s wealthy income comes from. Which incidentally makes all the sense in the world: two and a half years after Bernanke has been desperately doing everything in his power to raise the “wealth effect” if only for the richest 1% of the US population, it is, from the government’s perspective, time for the taxman to come knocking and demand his share of the capital gains. Yet what is lost in this ridiculous proposal are the unintended consequences, which always follow idiotic decisions arising out of central planning, number one of which would be a market crash as those who have paper gains since the market lows of 2009, scramble to lock in the old capital gains tax rate of 15% instead of holding on to paper profits that could end up being as high as 35% (or more): an event that would cut actual income by over 25% should one wait to cash out! And since 25% is substantially more than anything that Twist and QE3 and 4 could hope to achieve, it is all too conceivable that those holding on to profitable positions will have had enough, and take their profits, likely converting them into physical and non-dilutable assets along the way. As to whether they would subsequently relocate to far more hospitable countries, such as those that don’t foment class warfare, and implicitly invite a civil war, that remains yet to be seen.
In the meantime, here is how Obama just made sure his already record low rating is about to plumb depths unseen since the time of Jimmy Carter, via the NYT: