Theft

by Larry Levin

We all know that the massive government spending and QE madness, here and abroad, would lead to tax increases and budget cuts. Well, not really budget cuts but definitely tax increases. Yes sir, tax increases are coming all over the globe but who will lower the boom first?

It looks like the UK will be the winner.

From Mike Shedlock's blog - Legalized Theft - UK Proposes 50% Tax on Capital Gains, Up From 18%

Those hoping that any good would come out of the alliance between Conservatives and Liberal Democrats making Conservative party leader David Cameron the UK Prime Minister (replacing Labour Leader Gordon Brown), just might need to think again.

George Osborne, the new Chancellor of the Exchequer, is pondering 40-50% taxes on capital gains, up from the current 18% rate.

Please consider Higher taxes for a million as George Osborne's emergency Budget hits investors.

The Chancellor is to increase duty on capital gains even though the plan was not included in the Conservatives’ election manifesto.

CGT on “non-business assets”, including second homes, buy-to-let properties and shares, could rise from the current 18 per cent flat rate to a top rate of 40 or even 50 per cent, to fall in line with the higher rates of income tax.

The move could double tax bills for hundreds of thousands of investors and has been denounced as “legalised theft”. There has been speculation that the changes may be backdated to stop a “fire sale” of second homes and other assets.

The Liberal Democrats also want the tax to kick in below the current starting level of a £10,100 profit on any investment income. A threshold of £2,000 has been suggested. Deloitte, the accountancy firm, has estimated that that would mean the number of investors forced to pay CGT each year quadrupling to about a million.

It is estimated that 250,000 families own a second home and that there are one million buy-to-let properties. One in six families, a total of 3.75 million people, also own shares.

If the threshold for capital gains eligibility were lowered, it would drag thousands more middle-class investors into tax levels previously designed for much higher earners.

David Cameron has been warned that the decision to raise CGT would be particularly unwelcome for core Conservative supporters, who were unaware when they voted Tory that they would end up with a significant bill on their investments.

Middle-class families have complained that they are effectively paying the price for the Lib Dem proposal to reduce income tax for low earners, which was adopted as part of the coalition agreement between the two parties.

Asked why CGT was rising when the plan had not been included in the Tory manifesto, he said: “I think it would have been pretty clear for anyone coming into office that there was a substantial problem with capital gains tax and avoidance of income tax.”

50% Tax on Capital Gains is Insane

How anyone can call themselves a Conservative while proposing a 50% tax on capital gains is beyond me. Note how the party did not make it part of their platform but now says it was "pretty clear" this would happen.

Excuse me, but a hike in capital gains from 18% to 50% or even 40% was not clear to anyone, especially conservatives.

This policy proposal, if enacted, will wreck UK investment opportunities. It puts a firm sell on property and the UK stock index FTSE as well.

Good luck with that David Cameron. Your coalition may be burnt toast already.



Previous Day's Trading Room Results:

Trade Date: 5/17/10

E-Mini S&P Trades*
(before fees and commissions):

1) VA sell @ 10:36am at 1127.50 = +.75 & +.75 (2 lots)

2) FT sell @ 11:34am at 1120.00 = +.75, +.75, +.25 (3 lots)

3) FT sell @ 12:34pm at 1124.00 = +1.00 & +3.00 (2 lots)

4) Algorithm positions (22)

5) “Reading the Tape” positions (9) …combined Secret’s, Algo, & “Reading the Tape” total +4.75



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