I think the raise in the capital gains tax is a big deal.

[RDANGELO]

Just as important as getting the debt under control is fixing the structure of the economy where much of the wealth that is created goes to the richest in our society . This has lead us to have widest division on incomes in the industrialized world. There are many wealthy people who receive most of their income from this type of income and have been only paying 15% taxes on that income. Capital gains isn't graduated like regular income. Yes, this only raises it on income over 450 mil. , but this sets a precedent.
I was surprised that it came out in the deal; it is not something that Obama ran on.

[unblock]

1. it's still ridiculous that it's not taxed the same as labor income.

but yes, going from 15% to 20% is actually a big deal.

rmoney's tax bill will go up by about a third as a result.

actually the deduction phaseout is reinstated, so it will go up even more...

[Sunlei]

11. romneys gonna have to get a couple more dancin' horses & a race horse-so he can pay no tax

[mrsadm]

15. The Romney's took a $75,000 tax deduction on that horse

because it is "a business". Sorry but this still burns me up!

[Sunlei]

16. 75k deduction for that one tax return we saw. They have owned several 'investment horses'

Burns me up aswell. I've helped rescue several 'investment horses' these kind of people throw away once they can't get them to race or dance anymore.

[bemildred]

2. Yes, it is, it ends our bias towards passive investment.

And also ends the bias towards profit extraction over retaining money in the business.

[RussBLib]

3. ...and dividends?

I haven't seen anything about dividends specifically yet, but as of Jan 1 they were also due to be tied to your actual tax rate instead of being taxed at 15% like cap gains were.

I hope this happened. This will also raise some significant revenue and take away yet another method the wealthy have been using to avoid paying their fair share of taxes.

[geek tragedy]

4. Taxed same as capital gains. nt

[RussBLib]

8. well, 20% is better than 15%

mejor que nada, gracias.

[Mojorabbit]

5. I was looking at widows benefits and if one sells the house after the death

of spouse the first 250,000 is exempt now before the new law so am unsure if or how this may have been changed. I don't know if life insurance benefits are added to this. I know several widows who had to sell the house to get by after the husband died and every penny counted as had to last the rest of their lives. I would love to know more about how this works.

[bemildred]

6. I would look into it carefully, it's a lot of tax free money if done right.

The exemption for sale of primary residence is a separate issue from insurance, the life insurance is the beneficiaries, period, all of it, cash, tax free.

The handling of the gain on sale of primary residence depends on tax filing status for the year of sale, I think, and rules for widows may have some special things to consider. State law will apply to.

Best wishes.

[LiberalFighter]

10. Did a cursory search

It looks like it is $500k profit is exempt and then the tax is applied if sold within 2 years. There may be other details. But if that is the gist of it. I think the 2 years went into effect in 2007. After the 2 years the widow(er) can only have $250k profit exempt. It has to be a really expensive house to have that type of profit.

That $500k profit is for both couples when they both alive too when they sell their home I believe. I have some recollection about buying another home a couple can avoid some taxes if they buy another home of comparable value. Don't know all the details cause I haven't been in that situation. If you are single the amount is $250k.

More than likely those widows either did not have good financial advisers when their husbands were alive or something shaky going on. IMO

And from what I could determine life insurance benefits are not taxed if the person is the beneficiary and the person paying if the insured had any control of the policy. It probably requires a tax professional to help out.

[Mojorabbit]

13. Thanks! Neither had life insurance other than a small burial policy from their husbands. nt

[Filibuster Harry]

7. If nothing was done the capital gains was going up to 20 % anyway and dividends to regular rates.

Dividends went up to 20%. I still think the Democrats gave too much on income. Should have stuck with
$ 200,000 individuals and $ 400,000 on married joint. And should go with the estate tax at 35% on
$ 3.5 million. Then could talk about significant spending cuts. (But since they did not have this, glad they had limited itemized deductions and exemptions on individuals with more than $ 250,000 and couples with more than $ 300,000).
However, it is my understanding that taxes CANNOT EVER be made permanent.

[RussBLib]

9. there's no such thing as "permanent"

especially in politics....all the Congress would have to do is pass another law changing them...Permanent is just another misuse of the language.

[alcibiades_mystery]

14. "Permanent" just means there is no sunset provision (end date) explicitly written into the law

Nothing passed yesterday is "permanent" in an ordinary sense; rather, some of the provisions simply don't have explicit sunset provisions. If Obama came back in two months and asked that incomes at $250,000 through $450,000 be taxed at 37.5% (rather than pre-Bush tax cut 39.6%), and the Congress passed it, then it would go up. (I actually think this should be done.)

[Cosmocat]

12. Not a BIG deal

but a positive step in FINALLY getting some movement back to reason after YEARS of pushing it well past the most ideal spot.