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Posts Tagged ‘dividends’
July 30th, 2010 at 1:11 pm
Barclays Capital Study Echoes CFIF on the Danger of Raising Taxes on “The Rich”
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We note in our Lunchtime Liberty Update this week that the Obama Administration’s class warfare campaign targeting “the rich” will inflict further harm on our economy.  Not only would such tax increases hit small businesses (which create most new jobs in America) particularly hard, it would also penalize the income segment that accounts for 1/3 of consumer spending, which itself accounts for 2/3 of the nation’s economy. Confiscating even more of those dollars may sound fine on a teleprompter, but it will bring destructive consequences in the real world.

Now, a new study by Barclays Capital highlights another potential harm.  According to their analysis, Obama’s plan will cause a 9% drop in the S&P 500 and a 900-point drop in the Dow Jones Industrial Average.  As noted in this morning’s edition of The Hill, that would result from the Obama Administration’s focus on taxing upper income segments:

The Barclays report attributes the potential stock drop to President Obama’s plans to increase taxes on wealthy individuals, who are the country’s chief investors.  The report claims high earners are likely to shift their investment strategies because of the coming tax increase.  ‘According to the Fed’s 2007 Survey of Consumer Finances, 75 percent of stock market wealth is held by families in the top percentile of income,’ the Barclays report states.  ‘From a behavioral standpoint, if the government follows through on its plan to raise dividend and capital gains taxes for the highest income earners, it could influence the asset allocation decisions of an important investor class and potentially bring about a shift away from equities, with negative knock-on effects for the economy.'”