Wade Dokken’s Summary
Founder of WealthVest Marketing, an advanced financial marketing firm, specializing in high-quality fixed annuities, fixed-indexed annuities and life insurance products. WealthVest is unique in providing world-class marketing tools and an unsurpassed support system to its financial advisors – helping to make the best financial advisors even better. WealthVest gives advisors opportunities to work with the best carriers, products and services. WeathVest’s carriers include: Allianz, American Equity, ANICO, Aviva, Forethought, Life of the Southwest, Lincoln Financial Group, North American, Old Mutual, RBC and Reliance Standard. WealthVest marries highly-rated annuity products with a culture of networking, sharing, coaching and learning – to achieve powerful results.
WealthVest connects financial advisors to the best marketing coaches in the industry, including: Ron Carson, Carson Wealth Management, Peter Montoya, Tom Hamlin, Bill Good Marketing, and Dr. Ken Dycktwald. Marketing tools offered include: Marketing Partners, Advisor’s Products, Unlimited Fulfillment Services, Response Mail Express, Seminar Direct, CIS Marketing, Kramer Direct, Media Mastery, Ironstone Communications, and Wealth Tribes. WealthVest Marketing is headquartered in Bozeman, Montana, with offices in San Francisco, California.
Owner of PureWest Properties, the premier real estate firm for the luxury market in Southwestern Montana and the exclusive Christie’s Great Estates affiliate in the region. The PureWest team can provide both buyers and sellers with valuable insight and access to extensive market knowledge -- facilitating smooth, enjoyable, and focused real estate transactions within the Bozeman, Big Sky, Gallatin and Paradise Valley areas. Along with knowing where to find the best Montana properties, PureWest’s real estate professionals have unparalleled access to market statistics and trends, maximizing the negotiating power of both buyers and sellers.
Wade Dokken’s Specialties:
Marketing, Sales, Finance, Corporate Leadership, Financial Product Development, Organizational Development, Real Estate, Fixed Annuities, Fixed Indexed Annuities
Stock Slump No Impediment to Reform, Says Skandia's Dokken
May 4, 2001
In an op-ed in Investor's Business Daily, Wade Dokken, president and chief executive of American Skandia and author of New Century, New Deal: How To Turn Your Wages Into Wealth Through Social Security Choice, argues that recent stock downturns shouldn't put the public or the politicians off the idea of Social Security privatization. Following are excerpts from Dokken's commentary. You can also click here to view Dokken's appearance at a Cato Institute book forum.
"Those who profess to be shocked to discover for the first time that the stock market can't go up 20% a year forever are only kidding themselves. But equally delusional are those who try to use these short-term fluctuations in the equity markets as justification for opposing President Bush's proposal to allow Americans to invest part of their Social Security taxes through personal accounts. And I say this as a lifelong Democrat."
"To begin with, people live longer than bear markets. Much longer. There have been 20 bear markets since 1900. The average break-even time (measured by how long it took someone who invested at the top to regain the value of a stock index portfolio) was three years. Under a personal accounts-based Social Security program, a person would begin investing in his or her early 20s, and on average would live another 50 years. At some point he or she would retire, but would not completely 'un-invest' by liquidating the account. Therefore, I submit that 50 years is the relevant holding period to use when analyzing Social Security accounts and assessing their risk.
"At my request, Wharton professor Jeremy Siegel calculated the best, worst and average annual equity returns for every 50-year period since 1802. His results are stunning: 13.1% is the best 50-year return on record, 5.0% is the worst and 8.1% is the average annual return on stocks over 50 years. Real after-inflation annual returns were 9.3% (best), 4.4% (worst) and 6.8% (average). To my mind, these figures are a powerful rejection of the critics' argument that a near-term decline in equity values means we shouldn't let Americans take greater ownership and control of their retirement destiny. Even Siegel's lowest 50-year annualized real return, 4.4%, is 300% to 400% greater than the atrocious rate of return today's young workers can expect to receive from Social Security if we fail to enact accounts-based reform.
"'What if you didn't have 50 years?', some will ask. Or what if you were retiring right in the middle of a market correction? Even under these circumstances, it is proper to take the longer view. Government statistics predict that a person retiring today could easily live another 15 to 30 years (which, of course, is part of the reason we need to reform Social Security in the first place). Siegel's research indicates this is plenty of time to weather a market setback. In the last 200 years, the average annual after-inflation return on stocks has been 6.7% for a 25-year holding period, 6.9% for a 15-year holding period and 7% for a 10-year holding period.
"In any event, there is no need for your portfolio to be comprised entirely of stocks. Bank certificates of deposit, bond funds, real estate investment trusts - some or all of these investment options, whose performance is not highly correlated to that of stocks, will be available to workers through their accounts. Diversification lowers risk and insures that losses in one investment may be partially offset by gains in another.
"Additionally, when you are investing for the long haul, a fall in stock prices represents a buying opportunity. If shares today are cheaper than they were a month ago, you can buy more shares for the same amount of money. Then when equity values rise, your profit is even greater. This technique, known as dollar-cost averaging, is actively pursued by many investors already, and is inherently undertaken by anyone with a 401(k) or similar retirement plan that automatically invests a certain amount each month.
"The bottom line, as Bush himself recently noted, is that 'the plan is not going to be (to) invest in the lottery mutual fund or (to) take it to the track and hope to hit it right. It's going to be in relatively safe investments.' History amply demonstrates that stocks are relatively safe, especially when held along with other investments. As someone who has helped people save and invest for the long haul for more than two decades, I can attest that it is an axiom of finance that the right investment method or vehicle is one that is in sync with an investor's time horizon. Building, and then enjoying, a retirement nest egg is an extended, half-century-long process. Therefore, no matter how the stock market performs during a given month - or year, or even decade - personal accounts are the best long-term solution for preserving and strengthening Social Security."
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Ancompany.
Deroy Murdock
October 5, 2000 2:00 P.M.
Dems Turn On Gore’s Social Security Plan
Party loyalists argue Gore sounds too much like Bush.
Few Democrats are more stalwart than Wade Dokken, CEO of American Skandia — a Connecticut-based mutual fund company with $40 billion in assets. Dokken calls himself “an FDR-Truman-Kennedy-Johnson-Humphrey-McGovern-Carter-Clinton Democrat.” A photo in his office shows him beside a beaming Hillary Rodham Clinton. Since 1998, Dokken says he has given at least $15,000 to Democratic campaign committees. “When I hear Newt Gingrich’s name, I boo,” he explains. “And then, when the appeal for money comes, I start writing my check.”
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But Dokken has just broken with his party. In his new book, New Century, New Deal, Dokken slams the Democrats on Social Security. He laments that the “party of the people” prevents Americans from investing their payroll taxes in privately owned retirement accounts. Dokken calls Social Security Choice “a golden opportunity to appeal to the dreams and aspirations of the New Investor Class.”The problem Dokken sees is that Gore would rather arouse his party base with anti-business rhetoric than sing Americans a song about hope.
“The liberal leadership and left-wing allies of my party have always preferred welfare over wealth creation and anti-Wall Street populism to New Investor Class pragmatism,” Dokken writes, “and the Vice President desperately wanted to energize his more liberal base.”
Dokken harshly attacks Gore’s Retirement Savings Plus plan. First, Gore would require Americans to pay their full Social Security taxes to the government, leaving many modest workers with nothing to invest. For those who could afford portfolios, Gore promises matching tax credits — in some cases, three federal dollars for every dollar a worker invests. This hefty, new entitlement would ignore Social Security’s long-term, financial pitfalls.
Second, Dokken considers the vice president’s current policy hypocritical given his earlier pronouncements. Gore today says he wants to help some Americans invest for retirement. But last May he called the stock market — what else? — “risky” and said, “You should not have to roll the dice with your basic retirement security.” Having denounced the casino, Gore now wants to buy Americans their chips. As Dokken observes: “Either the stock market is a terrible place to invest for the future, or it isn’t.”
George W. Bush’s plan is broader and bolder. Dokken calls it “by far superior.” Bush would free even the poorest Americans either to remain in Social Security or voluntarily to allocate two percent of their FICA taxes to personal retirement accounts they would invest in stocks and bonds. These funds would be their property, not Uncle Sam’s. They could bequeath these assets to their heirs, something unimaginable under today’s Social Security scheme. Bush’s plan, Dokken believes, will “shift our focus from poverty prevention to wealth creation and turn every worker into an owner.”
Dokken now joins other prominent Democrats who want Americans to have universal access to the capital markets. Sam Beard, former advisor to Robert F. Kennedy, Minnesota’s ex-congressman Tim Penny and Nebraska senator J. Robert Kerrey enthusiastically advocate personal retirement accounts funded with payroll taxes. New York senator Daniel Patrick Moynihan wrote in a May 30 New York Times column that he wants personal retirement accounts to help Americans build estates — “for doormen, as well as those living in the duplexes above.”
Even Senator Joseph Lieberman supported Social Security Choice, until he performed an Olympic-class back-flip and landed on Gore’s ticket.
“A remarkable wave of innovative thinking is advancing the concept of privatization,” he told the Copley News Service in 1998. He added that “individual control of part of the retirement/Social Security funds has to happen.” Lieberman’s Democratic Leadership Council discovered in a survey that year that 72 percent of “Democrats” favor investing payroll taxes in personal accounts.
Governor Bush repeatedly and passionately promoted his Social Security blueprint in the October 3 presidential debate. “I want younger workers to be able to manage some of their own money — some of their own payroll taxes,” Bush said, “to get a better rate of return on your own money.”
Bush must hammer that theme, on the hustings and in commercials. This issue will energize younger Americans like a double espresso. Remember, in 1998, motivated young voters transformed Jesse Ventura from a colorful lark into Minnesota’s governor.
In the October 11 debate, G.W. Bush should invite Al Gore to join Bush, Wade Dokken, Bob Kerrey and Pat Moynihan in a bipartisan appeal for Social Security Choice. If Gore refuses, Bush should ask the leader of the “party of the little guys” why he insists on keeping the little guys little.
Listen to the Audio Version
PDF for Setting It Straight with FinanceCove
ORIGINAL ARTICLE CAN BE FOUND AT: The Disadvantage of Fixed Index Annuities
The following comment was submitted to the blog author at www.financecove.doodig.com.
I am an independent market research analyst who specializes exclusively in the indexed annuity (IA) and indexed life markets. I have tracked the companies, products, marketing, and sales of these products for over a decade. I used to provide similar services for fixed and variable products, but I believe so strongly in the value proposition of indexed products that I started my own company focusing on IAs exclusively. I do not endorse any company or financial product, and millions look to us for accurate, unbiased information on the insurance market. In fact, we are the firm that regulators look to, and work with, when needing assistance with these products.
I am contacting you, as the author of a blog that was published at www.financecove.doodig.com, “The Disadvantages of Fixed Index Annuities.” This article had numerous inaccurate and misleading statements about indexed annuities in it. I am contacting you in response to these inaccuracies, to ensure that you and your readers have accurate, unbiased information on these products in the future.
Indexed annuities do not “mitigate the risks of fixed annuities.” Fixed annuities do not have any risks, so this statement is inaccurate.
In addition, you do not refer to purchasers of fixed or indexed annuities as “investors.” Only those who purchase variable annuities can be called “investors,” as these products place the purchaser’s principal and gains at risk due to market volatility. Stocks, bonds, and mutual funds are also investments. The Securities and Exchange Commission (SEC) is responsible for the regulation of such investment products. Fixed and indexed annuities, by contrast, are insurance products- similar to term life, universal life and whole life. Insurance products are regulated by the 50 state insurance commissioners of the United States. Insurance products do not put the client’s money at risk, they are “safe money products” which preserve principal and gains. Investments, by contrast, can put a client’s money at risk and are therefore appropriately classified as “risk money products;” they do not preserve principal.
You think that the limiting of interest on indexed annuities is a detriment when it is not. To ensure that you properly understand how indexed annuities are intended to work, I would like to provide a brief overview. Because indexed annuities are a “safe money place,” they should be compared against other safe money places. Products like stocks, bonds, mutual funds, and variable annuities are “risk money places,” where the client is subjected to both the highs and the lows of the market (also referred to as “investments”). It is inappropriate to compare any safe money place, such as an indexed annuity, to risk money places and it is most certainly not appropriate to compare safe money places to the market index itself. Indexed annuities are not intended to perform comparably to stocks, bonds, or the S&P 500 because they provide a minimum guarantee where investments do not. Indexed annuities are priced to return about 1% – 2% greater interest than traditional fixed annuities are crediting. In exchange for this greater potential, the indexed annuity has a slightly lesser minimum guarantee. So, if fixed annuities are earning 5% today, indexed annuities sold today should earn 6% – 7% over the life of the contract. Some years, the indexed annuity may return a double-digit gain and other years it may return zero interest. However, what is most likely to happen is something in between. Were the indexed interest NOT limited, the insurer could not afford to offer a minimum guarantee on the product, and THAT is a variable annuity- not an indexed annuity. On the other hand, the client is guaranteed to never receive less than zero interest (a proposition that millions of Americans are wishing they had during that period of 03/08 to 03/09) and will receive a return of no less than 117% worst-case scenario on the average indexed annuity. In addition, it is absolutely irresponsible to say that indexed annuity “offer market-type returns.” Please refrain from such statements in the future.
Furthermore, caps are not any more “limiting” than participation rates or spreads over a long period of time. Regardless of whether the interest is limited by a cap, participation rate, or spread- all indexed annuities are priced to return about 1% – 2% greater interest than fixed annuities and certificates of deposit (CDs) are crediting. Ultimately, the index used, the crediting method utilized, and the choice of a cap or participation rate are irrelevant. All indexed annuities are priced to return 1% – 2% greater interest than traditional annuities are earning today, over the life of the policy (regardless of index, crediting method, and pricing lever). Indexed interest on indexed annuities sold today could be as much as 8.7% or even more. All of these different features (index, crediting method, pricing lever) merely give the marketing organizations that distribute these products an opportunity to promote why their product is “different” or “better” than their competitors’ products, to the agent. They do not actually make any one product better than another. Yes, some designs will perform better than others in some years. However, over the life of the contract, they will be about even keel.
Although you are quick to point-out that indexed annuities are taxed at income tax rates, as opposed to capital gains rates, you fail to mention the many benefits of indexed annuities, which include (but are not limited to):
1. No indexed annuity purchaser has lost a single dollar as a result of the market’s declines. Can you say the same for variable annuities? Stocks? Bonds? Mutual funds? NO.
2. All indexed annuities return the premiums paid plus interest at the end of the annuity.
3. Ability to defer taxes: you are not taxed on annuity, until you start withdrawing income.
4. Reduce tax burden: accumulate your retirement funds now at a [35%] tax bracket, and take income at retirement within a [15%] tax bracket.
5. Accumulate retirement income: annuities allow you to accumulate additional interest, above the premium you pay in. Plus, you accumulate interest on your interest, and interest on the money you would have paid in taxes. (Frequently referred to as “triple compounding.”)
6. Provide a death benefit to heirs: all fixed and indexed annuities pay the full account value to the designated beneficiaries upon death.
7. Access money when you need it: fixed annuities allow annual penalty-free withdrawals of the account value, typically at 10% of the annuity’s value (although some indexed annuities permit as much as 20% of the value to be taken without penalty). In addition, 9 out of 10 fixed and indexed annuities permit access to the annuity’s value without penalty, in the event of triggers such as nursing home confinement, terminal illness, disability, and even unemployment.
8. Get a boost on your retirement: many fixed and indexed annuities provide an up-front premium bonus, which can provide an instant boost on your annuity’s value. This can increase the annuity’s value in addition to helping with the accumulation on the contract.
9. Guaranteed lifetime income: an annuity is the ONLY product that can guarantee income that one cannot outlive.
Verifying how little research you have done on indexed annuities, there is no such thing as a “fund manager” in this market. Only mutual funds have “fund managers.” Please do some research on the products you write about in the future, prior to publishing your content.
Furthermore, there are no fees on indexed annuities. The only “cost” to the consumer is a commitment of time.
Indexed annuities do not have “significant” penalties. There are indexed annuities with surrender charges as short as three years and the average first-year penalty (which declines thereafter) on indexed annuities is a mere 10.61%. Every indexed annuity allows 10% of the annuity’s value to be withdrawn without penalties on an annual basis; some allow as much as 50% to be withdrawn in a single year! Plus, 9 out of 10 indexed annuities provide a waiver of the surrender charges, should the annuitant need access to their money in events such as nursing home confinement, terminal illness, disability, and even unemployment. Consider the fact that these products pay the full account value to the beneficiary upon death, and I think that you’ll see that consumers have tremendous ability to “get their money when they need it” with indexed annuities. Certainly, all annuities are considered long-term investments. However, indexed annuities are some of the most liquid retirement income products available today!
You should note that “annual reset” is not a crediting method. It is an indicator of when the next index measurement begins on most indexed annuities (annually).
While it is true that insurance companies reserve the right to change the caps, participation rates, and asset fees on indexed annuities in years two plus, it does not mean that insurance companies do. I can name numerous companies that have never reduced their renewal rates on their indexed annuities. However, this provision is no different than that of a fixed annuity, where the insurance company has the discretion to change the credited rates in years two plus. Not to mention the fact that variable annuities have the ability to increase fees if necessary in years two plus. All fixed and indexed annuities are subject to minimum rates, as approved by the state insurance divisions that approve the products for sale in their respective states. Insurance companies are smart to protect themselves by filing products that have the ability to change rates annually, in the event of a volatile market. I personally feel much more confident that the companies offering these products today will be able to make good on their claims-paying ability, considering such flexibility in the event of unforeseen circumstances.
It truly illuminates how little you know about the indexed annuity market when you talk about “high water mark” indexed crediting methods. There are only eight products left on the market that use this crediting method. In addition, this method does not necessarily result in the purchaser “not [receiving] the accrued interest during the period if the [indexed annuity] were surrendered before the term ends.”
I would advise that if you readers truly want to “weigh the disadvantages against the benefits” of indexed annuities, that they go to my website, and not yours. It appears that you do not know enough about these products to be writing about them. However, should you have a desire to write about these products in the future, I am more than happy to assist you in your understanding of these products or aid you in fact-checking. Please do not hesitate to contact us, should there be a need.
Thank you.
Sheryl J. Moore
President and CEO
AnnuitySpecs.com
LifeSpecs.com
IndexedAnnuityNerd.com
Advantage Group Associates, Inc.
(515) 262-2623 office
(515) 313-5799 cell
(515) 266-4689 fax
Defying Democrat Orthodoxy on Social Security
by Deroy Murdock
Deroy Murdock is a policy adviser to the Cato Institute and a columnist with Scripps Howard News Service.
Added to cato.org on October 16, 2000
This article appeared on cato.org on October 16, 2000.
Few Democrats are more stalwart than Wade Dokken, CEO of American Skandia — a Connecticut-based mutual fund company with $40 billion in assets. Dokken calls himself "an FDR-Truman-Kennedy-Johnson-Humphrey-McGovern-Carter-Clinton Democrat." A photo in his office shows him beside a beaming Hillary Rodham Clinton. Since 1998, Dokken says he has given at least $15,000 to Democratic campaign committees. "When I hear Newt Gingrich's name, I boo," he explains. "And then, when the appeal for money comes, I start writing my check."
But Dokken has just broken with his party. In his new book, New Century, New Deal, Dokken slams the Democrats on Social Security. He laments that the "party of the people" prevents Americans from investing their payroll taxes in privately owned retirement accounts. Dokken calls Social Security Choice "a golden opportunity to appeal to the dreams and aspirations of the New Investor Class."
The problem Dokken sees is that Gore would rather arouse his party base with anti-business rhetoric than sing Americans a song about hope.
Deroy Murdock is a policy adviser to the Cato Institute and a columnist with Scripps Howard News Service.
"The liberal leadership and left-wing allies of my party have always preferred welfare over wealth creation and anti-Wall Street populism to New Investor Class pragmatism," Dokken writes, "and the Vice President desperately wanted to energize his more liberal base."
Dokken harshly attacks Gore's Retirement Savings Plus plan. First, Gore would require Americans to pay their full Social Security taxes to the government, leaving many modest workers with nothing to invest. For those who could afford portfolios, Gore promises matching tax credits — in some cases, three federal dollars for every dollar a worker invests. This hefty, new entitlement would ignore Social Security's long-term, financial pitfalls.
Second, Dokken considers the vice president's current policy hypocritical given his earlier pronouncements. Gore today says he wants to help some Americans invest for retirement. But last May he called the stock market — what else? — "risky" and said, "You should not have to roll the dice with your basic retirement security." Having denounced the casino, Gore now wants to buy Americans their chips. As Dokken observes: "Either the stock market is a terrible place to invest for the future, or it isn't."
George W. Bush's plan is broader and bolder. Dokken calls it "by far superior." Bush would free even the poorest Americans either to remain in Social Security or voluntarily to allocate two percent of their FICA taxes to personal retirement accounts they would invest in stocks and bonds. These funds would be their property, not Uncle Sam's. They could bequeath these assets to their heirs, something unimaginable under today's Social Security scheme. Bush's plan, Dokken believes, will "shift our focus from poverty prevention to wealth creation and turn every worker into an owner."
Dokken now joins other prominent Democrats who want Americans to have universal access to the capital markets. Sam Beard, former advisor to Robert F. Kennedy, Minnesota's ex-congressman Tim Penny and Nebraska senator J. Robert Kerrey enthusiastically advocate personal retirement accounts funded with payroll taxes. New York senator Daniel Patrick Moynihan wrote in a May 30 New York Times column that he wants personal retirement accounts to help Americans build estates — "for doormen, as well as those living in the duplexes above."
Even Senator Joseph Lieberman supported Social Security Choice, until he performed an Olympic-class back-flip and landed on Gore's ticket.
"A remarkable wave of innovative thinking is advancing the concept of privatization," he told the Copley News Service in 1998. He added that "individual control of part of the retirement/Social Security funds has to happen." Lieberman's Democratic Leadership Council discovered in a survey that year that 72 percent of "Democrats" favor investing payroll taxes in personal accounts.
Governor Bush repeatedly and passionately promoted his Social Security blueprint in the October 3 presidential debate. "I want younger workers to be able to manage some of their own money — some of their own payroll taxes," Bush said, "to get a better rate of return on your own money."
Bush must hammer that theme, on the hustings and in commercials. This issue will energize younger Americans like a double espresso. Remember, in 1998, motivated young voters transformed Jesse Ventura from a colorful lark into Minnesota's governor.
G.W. Bush should invite Al Gore to join Bush, Wade Dokken, Bob Kerrey and Pat Moynihan in a bipartisan appeal for Social Security Choice. If Gore refuses, Bush should ask the leader of the "party of the little guys" why he insists on keeping the little guys little.
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There are even people who believe they should hold on to their assets rather then sell them when the country is characterized by a high capital gains tax.
Harry Wallop Consumer Affairs Editor writes on the repercussions,
“The institute studied America, where the rate has changed substantially – both up and down – since the 1950s. It calculated that a tax increase of 10 percentage points led to a 21 per cent reduction in revenues. On another occasion an increase of 8 percentage points led to a 15 per cent fall in tax revenues. “
This statistic helps illuminate the fact that there is a fine line when it comes to capital gains rates. If the rate is to high, people will simply hold on to their assets and a substantial amount of revenue will not be collected.
A major concern in the current economic climate is that high capital gains taxes will erode business growth. Newt Gingrich and Emily Renwick Write in The American, “The capital gains tax is an unequivocal burden on the capital we need to grow, prosper, and compete in a 21st century global economy. Any American or business that sees an appreciation of the value of their income (capital) must pay up to 39.6 percent in additional taxes on this appreciation (depending on the length of the investment and the marginal tax rate of the individual or business). Considering inflation, the effective rate paid on investments is even higher. As we are coming out of the recession, the United States should do everything within its power to create a financial environment that allows businesses to rapidly grow and prosper.”
As Newt Gingrich points out the fact that we are in an economic recession and anything that hinders corporate flexibility and innovation will inevitably undermine the prospect of long-term growth.
Additionally capital gains taxes are viewed as an obstacle to retirement. Many seniors are relying on the value of their stocks in retirement savings plans.
Curtis Dubay of the Heritage Foundation writes,
President Obama’s “Budget Blueprint” proposes to raise the tax rate on dividends and capital gains from 15 percent to 20 percent.[1] This tax hike would hit senior citizens particularly hard, as it would depress the value of stocks held in many types of retirement savings plans they rely on for income to supplement their Social Security benefits. These plans include 401(k)s, 403(b)s, IRAs, and self-directed state, local, and federal government employee retirement funds. As of December 31, 2008, these plans invested $4.4 trillion in stocks–just over of 54 percent of all their assets.[2]” The perception is that an increase in capital gains taxes reduces the market value of stocks.
Retirement prospects have already been curtailed so much with the housing market and lackluster stock market. Taxing revenue used by senior citizens as a means to retire is only furthering the retirement crisis in the United States.
While these are all issues that are associated with incredibly high capital gains taxes, it is difficult to claim that the capital gains policy in the United States is unreasonable.
In the United Kingdom as recent as this May, the government was discussing raising the capital gains tax to 40%. This created a huge scare with property owners however the government made concessions and the capital gains tax ended up being relatively modest. Kevin Brass of The Real Estate Channel writes on the concession, “ Instead the new budget calls for a relatively rational raise in the capital gains tax from 18 percent to 28 percent. And the rate will only affect higher tax brackets, not middle income earners.”
Harry Wallop Consumer Affairs Editor writes,
“If England had hiked the rate up to 40% it would have the highest tax rate in the developed world. Of the 30 leading countries that are members of the Organization for Economic Co-operation and Development, not one has a rate higher than 30 per cent, if citizens have held on to their assets for at least three years.
The average rate is just 15 per cent, with many countries not levying the tax at all. “
A shift from 15 % to 20% is not that dramatic. Only time will tell if it will cause the perceived social harms that high capital gains taxes generally cause happen with the upcoming tax changes.