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Shock Waves From Obama’s Victory

Friday, November 9, 2012
by Russ MacKay

As part of the look through into the new U.S. tax regime for 2013, it appears there will be increases to certain individuals on the tax rate of ordinary income, capital gains, dividends, and estate taxes.  For example, the top tax rate on capital gains is expected to rise from 15% to 23.8%, an increase of almost 60%.

Therefore, if you were a long term U.S. investor in Apple and are sitting on a  $1,000,000 paper profit, you’d pocket an extra $88,000 if you were to crystalize that gain today, versus waiting until 2013. (assuming no future change in the stock’s value)

You can bet there will be an increase in trading activity between now and year end as those affected by these changes will adjust their portfolios to maximize their after-tax returns, and re-set their portfolios for the new tax regime.

Russ MacKay


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