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White House considering tax incentive for more Americans to buy stocks

ucbruin

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"The proposal, one of many new tax cuts under consideration, would see a portion of household income treated as tax-free for the purposes of investing outside a traditional 401(k). Under one hypothetical scenario described by multiple officials, a household earning up to $200,000 could invest $10,000 of that income on a tax-free basis, although officials noted these numbers are fluid."




Sounds as though the "rich get richer"....
 

Joe Flacco

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It is for not rich people because it is for people earning less than $200k. For example, a person that makes $50k per year can put $10k in the market and then pay taxes on $40k minus deductions of income.
 

Tom Woolford

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It is for not rich people because it is for people earning less than $200k. For example, a person that makes $50k per year can put $10k in the market and then pay taxes on $40k minus deductions of income.
But if they invest 10K, they are going to pay brokerage fees and other costs probably as much as the tax savings. But someone with more money than you is going to have your money in their pocket.






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Lee in L.A.

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Right. $200k a year is merely well off, not rich.
We'll be needing to work on that then. :leeann:
 

ucbruin

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"The development comes as President Donald Trump seeks reelection in November. He has signaled a willingness recently to scale back Social Security and Medicare."

"“The Trump administration is trying to pave the way for adjusting Social Security by giving people incentives to invest privately,” says Peter Cardillo, chief market economist at Spartan Capital Securities. “I don’t think a recipient of Social Security today would have anything to worry about, but future generations would.”"

"“It's a good idea to incentivize people to contribute to their savings to build up a nest egg, but I don't think this will move the needle," says Thomas Martin, senior portfolio manager at Atlanta-based GLOBALT Investments. "It’s hard to imagine that it would be that stimulative to the stock market if it’s geared toward Americans that already own stocks.” Just 55% of Americans own stock, according to a recent Gallup poll."

"“It certainly benefits the upper portion of the income population more than the lower half. Anyone with a high salary is likely investing anyway," says Yung-Yu Ma, chief investment strategist and managing director at BMO Wealth Management.


Last month, Trump hinted in an interview with CNBC that he would be willing to consider cuts to social safety-net programs like Medicare to reduce the federal deficit if he wins a second term.

His proposed budget, unveiled Monday, targets those programs and includes cuts to the Social Security program. The budget also includes cuts to student loan forgiveness programs."




Only a maroon would believe this is intended to help the middle class....
Can't trust him any farther than you can throw him....
 

Gobears81

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But if they invest 10K, they are going to pay brokerage fees and other costs probably as much as the tax savings.
Brokerage fees are basically null if you use an online account :)

There's a lot of unknowns here, but it strikes me as a big overlap with IRAs that also have income limits near this level. Don't see this as a game changer personally
 

Mark K

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But if they invest 10K, they are going to pay brokerage fees and other costs probably as much as the tax savings. i
Most online brokerages have very low fees, in the $10 or so range. Schwab trades are $0.

Subsidizing stock market investing is probably as bad of an idea as the mortgage interest deduction.

I'm sure they'd put in restrictions like how long you have to keep the $$ in the account otherwise people would put the money in one week and take it out the next just for the tax break. And if they put in time restrictions, what happens when the market corrects? Your stock falls, you sell and take a loss, and then you might have a penalty for early withdrawal. Didn't they have something like this 20+/- years ago with a savings account? Tax free interest on a savings account maybe....? IIRC, that was a joke.

I don't see it happening but it might sound good to some people in an election year.
 

Big ole Boy

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Looks like stocks will go up while the global economy contracts. Warren Buffet just bought a ton of stocks. Maybe he thinks the worst of the COVID19 is all priced in.
 
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