An April 15th Look at Taxes and the Stock Market

Happy Fiscal Gorge[1]Day! Guess who’s really happy from last night’s tax deal? Heirs, financiers, and people who live off their piles of money.

Over the years, Warren Buffett has gotten a lot of miles out of his folksy charm and ability to distill elaborate financial concepts into plain English. And recently, proponents of higher tax rates for the wealthy have gotten a lot of miles out of those qualities too — as the world’s fourth richest man has advocated repeatedly for just that policy. This week, Mr. Buffett was at it again — this time in the New York Times Op-Ed section — calling for, among other things, a higher capital gains tax rate.

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By James Kwak

If a new tax is passed and no one actually pays it, can it fund health-care reform? It sounds like a zen koan for public policy students. But the Senate Finance Committee is banking on it. The excise tax on employer-provided, high-value health insurance is something of an odd bird: It's a new tax that raises money even, and perhaps especially, if people manage to avoid paying it.

By James Kwak Christina and David Romer’s new paper, “The Incentive Effects of Marginal Tax Rates: Evidence from the Interwar Era,” is available as an NBER working paper (if you are so lucky). Given the current debates about taxes, the paper is likely to garner some attention.

By Doug Carey:When investing in Real Estate Investment Trusts (REITs) or Master Limited Partnerships (MLPs), investors are sometimes surprised by the hefty tax bill. REITs and MLPs are taxed at ordinary income tax rates if they are in taxable accounts, which takes a big bite out of the total return for many. But there is a way to get around this tax bill if an investor has capital losses he can use. I call this strategy dividends to capital gains conversion.