As the tax debate begins between Senator Barack Obama and Senator John McCain, many investors and tax advisors say capital gains taxes will increase no matter what the outcome is this coming November, The Wall Street Journal reports. Senator Obama seeks to increase the current capital gains rate 5% or more for families making over $250,000.
McCain wishes to maintain the current rates of 15%, yet many wealth advisers affirm that despite his intentions, Congress, which is currently in control by Democrats, will force him to concede and increase rates.
Therefore, due to the inevitable increase, long-term investments of capital gains, mutual fund shares and other securities are at the lowest theyll be for some time, perhaps even decades, said Nadine Gordon Lee, president of wealth management firm Prosper Advisors LLC.
Discrepancies of how to handle the future increases to capital gains taxes are present as some advise staying put, while others are telling clients to sell and diversify accounts.
Dan Schrauth, a wealth advisor for JPMorgan Private Bank in San Francisco, noted that as capital gains rates increase, diversification becomes even more important to his clients. Uncertainty of when rates will rise and by how much causes many advisers to issue their clients to be in no rush to sell. Retired banker David Anderson of Darien, Conn., said no investment move should ever be made based only for tax reasons and that especially due to this years market declines, investors should preserve their long-term assets for the time being.
Despite differences on how long-term capital gain investments should be managed in the current market, agreement can be made on one thing--whether a pro-tax Democrat or anti-tax Republican wins the presidency, capital gains taxes will be increasing in the nearby future.