Taxation at the Top: Its Long-Term Effect on the Assets

Abstract

This chapter will share a century of data showing the top income tax rates, capital gains rates, estate tax rates as well as the levels that put an investor in the top brackets. The chapter will stress the flexibility that investors must develop in order to own tax-sensitive portfolios, knowing that the rates they will experience along the way are likely to change. We will draw conclusions that taxes are an inescapable part of history. Income tax rates tend to go up during times of war and economic crisis. The wider the gap between income and capital gains tax rates, the more attractive stocks become when compared to taxable bonds. Gifting generally carries less of a tax burden than estate taxes.