Thats taxes on income jag. Capital gains and dividend taxes apply to all now and I can't see that changing, except being raised as Obama has stated. Incentives to invest are already there...low taxes! The more new companies that are formed, the more new revenue sources for the gov and the more jobs. In the discussions in the past week, most analysts have criticized Obama's ideas markets and business. New technologies are a different category, that he may do, but it has nothing to do with stocks & other investments.
To quote Beach's post:
It’s true that lower tax rates have been a huge boon to shareholders—but most of them are not rich. The latest polls show that 52 percent of Americans own stock and thus benefit directly from lower capital gains and dividend taxes. Reduced tax rates on dividends also triggered a huge jump in the number of companies paying out dividends. As the National Bureau of Economic Research put it, “The surge in regular dividend payments after the 2003 reform is unprecedented in recent years.” Dividend income is up nearly 50 percent since the 2003 tax cut.
The same phenomenon occurred with the capital gains tax, which is essentially a voluntary tax because asset owners can avoid it by simply holding onto their stock, home, or business. This “lock-in” effect, as it is called, can be economically inefficient, since owners have a tax incentive to keep poor investments, rather than drawing out the cash and putting it into assets that are more productive. When the capital gains tax is cut, people unlock their assets and reinvest in other enterprises.
The 1997 tax reform, passed under President Clinton, reduced the capital gains tax rate from 28 percent to 20 percent, and taxable capital gains nearly doubled over the next three years. The 2003 reform brought the rate down to 15 percent, and between 2002 and 2005 there was a 154 percent increase in capital gains reported as income.
This explosion in realized gains cannot be explained only by the rise in the stock market, which averaged just 13 percent annually between 2003 and 2005. Capital gains tax receipts also far outpaced the revenues that the government’s static models predicted. Between 2003 and 2007, actual tax receipts exceeded expectations by $207 billion.
