David Rosenberg On Taxation-Shock-Syndrome

Tyler Durden's picture

While nothing is more certain than death and taxes (and central bank largesse), David Rosenberg of Gluskin Sheff uncovers The Unlucky Seven major tax-related uncertainties facing households and businesses that will likely lead to multiple compression in markets (rather than the much-heralded multiple expansion 'story' which appears to have topped the talking-head charts - just above 'money on the sidelines' and 'wall of worry', as 'earnings-driven' arguments are failing on the back of this quarter). As he notes the radically changed taxation climate in 2013 and beyond will have an impact on all economic participants as they will probably opt to bolster their cash reserves in the second half of the year in preparation for the proverbial rainy day.


First, the top marginal personal tax rate rises to 39.6% from 35% as the Bush tax cuts expire at the end of 2012.

Second, a limit on itemized deductions will add a further 1.2 percentage points to the top rate.

Third, a new 0.9% Medicare tax on incomes over $200,000 gets imposed ($250,000 for joint filers).

Fourth, the top 15% rate on long-term capital gains rises to 20%.

Fifth, dividends will once again be taxed at ordinary rates — 39.6% for the top income earners.

Sixth, a new 3.8% tax on investment income gets introduced for incomes over $200,000 ($250.000 for joint filers).

Seventh, the top estate tax rate goes from 35% to 55% (60% in some cases). The estate tax exemption falls to $1 million from $5 million (the gift-tax exemption also drops to $1 million and the rate adjusts hither to 55%).

Forty-one separate tax provisions expire this year — see page 32 of the Economist. Of course, there is always the chance that after the November 6th election, a Congress that can never seem to allow anything temporary to meet its expiry date will pass an extension — for more on all this, see More Uncertainty for 2013 on page B9 of the Weekend WSJ.

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DoChenRollingBearing's picture

All of these new taxes are going to kill the stock market and the economy along with it.

I presume that is the plan.  One way out is to buy gold (while you can!) and never sell it.  Hide it well.  Get some out of the country too.

economics1996's picture
"There is only one way to kill capitalism - by taxes, taxes, and more taxes" - Karl Marx



Thomas's picture

There's one in there that will cost me enormously.

DosZap's picture


He Just set them, 44%,

He is dead set on driving all  investment capital out of this country.

EndTheMedia's picture

The war on drugs. A new form of slavery. http://bit.ly/wOSZEO

DoChenRollingBearing's picture

+ 1  Excellent link.

I would have been curious to see the data all the way back to, say, 1974...  


Cruel Aid's picture


Vs. +1, since we are on the religous section of the commandeered presidential campaign.

navy62802's picture

When the rainy day actually arrives, that cash will be worthless.

ACP's picture


That means much, much, much MORE MONEY PRINTING!!!!!!!!!!!!!!!!!!!!!!!!


And if you don't like it, Eric Holder will come to your house and take your spouse, your kids, your house, your car, your money and give you a swift kick in the BALLS!

OldTrooper's picture

That'll be the day!  Holder actually doing something, personally, taking responsibility for it?  No, stormtroopers will kick in your door and do all those things...as part of DOJ sponsored 'Operation Tightwad'.  Holder will not be able to recall authorizing or even hearing about Tightwad.  Strangely, no memos, emails or other evidence of Tightwad will be provided in response to congressional subpeonas - after all, these were just a few thousand rogue agents, doing their best to keep Americans (at least the Americans that matter) safe in a very dangerous world.

mick_richfield's picture

I remember that guy!  Obama's nominee for AG, right?  Didn't seem very bright...

What's he doing now?

Pegasus Muse's picture

What he's always done --- in or out of "public service" --- taking care of his owners,              the TBTP(rosecute) Ganster Banksters.

"U.S. Attorney General Eric Holder and Lanny Breuer, head of the Justice Department's criminal division, were partners for years at a Washington law firm that represented a Who's Who of big banks and other companies at the center of alleged foreclosure fraud, a Reuters inquiry shows."


Death and Gravity's picture

The top rate increase could be much higher, if only they put it on UNEARNED INCOMES, like in the old days - where it specifically hit rent incomes, ie. from landed (and I suppose it could be extended to patent) privilege.

zorba THE GREEK's picture

The taxman cometh. Every dollar taken out of the economy by taxes is a dollar not spent to boost the economy.

No matter how high taxes are raised, tax revenues still remain in the 16%-18% of GDP range. So taxes are not

the solution to the deficit. Spending and waste need to be cut.

LetThemEatRand's picture

That is true for the large majority of the population.  Not so much for the top .5% or so.   Yet they manage to pay virtually no taxes at all while holding most of the wealth.  Go figure.

GernB's picture

The answer to the top .5% not paying any taxes is not to raise the marginal rate to 39% for those  that do. Many are S-corp owners and those taxes are taxes on money they make and could reinvest in their business, but Uncle Sam knows better how to invest that companies money. The company would squander it on hiring employees, bigger facilities and more equipment to increase revenue and add to the economy and increase the taxes they pay.

economics1996's picture

If you want a fair distribution of income end the Federal Reserve.  Inflation allows capital owners (the rich) to get the atvantage over workers.

CrashisOptimistic's picture

Increasing taxes takes money out of the economy.

Decreasing spending takes money out of the economy.

It's all going to fall apart.

DoChenRollingBearing's picture

Lots of us believe the same.  Preparation is key.

Here's a Beginner's List:

-- gold & silver

-- guns & ammo

-- water and food (and ways to ensure supply of both)

-- medicine and first aid kit

-- residency in another country

-- useful skill sets

-- farmland, but not so much that property taxes kill you...

The list would go on forever...

Socratic Dog's picture

I've been thinking lately that farmland may not be so important.  Most of it is owned by corporations.  I read as meaing that, should TSHTF in a truly big way, all that land is up for grabs.  So maybe figuring out where you're going to go and stake your claim to a few Monsanto acres is a good use of time.

What I really like about the thought is that a lot of small landowners now are those who have successfully raped the rest of us.  If land is up for grabs in some total collapse scenario, then the deserving will have the chance to get it, regardless of whether they are presently rapists or not.  Young people, who haven't had the chance to accumulate (steal) capital yet will be in there with a chance.

Non Passaran's picture

You're a true genius! The entire class od landless people is having the exact same idea. Fight it out with them.

mick_richfield's picture

Do you know what Monsanto sprays on a lot of that land?

Do you know how long it takes for what they spray on that land to go away?

Do you know how long it takes to get something sustainable going on a piece of land?  I mean like, oh a big garden.  Or an orchard.

Do you know how to water stuff when it doesn't rain?

Do you know how to store what you grow in the summer over the winter?

I've been on 10 acres for 8 years, and I would say that just last year I started to get things going kind of OK.  It took a long time to learn what my land was good at, what I was good at, and how to handle the biggest problems.

MachoMan's picture

This is why "useful skill sets" should be #1 on the list...  if you are useful, you will not starve...  it's that simple.

Once you have the basics of wilderness survival down...  then you can move on to marksmanship, weapons training, and general combat...  then on to crafts, trades, etc.  Generally, most people learn some of each category as time goes on...

GernB's picture

Increasing taxes is a double wammy it takes money out of the economy but does not gain the benefits of private sector spending because the private sector tends to spend money on what is needed while governments tend to mis-allocate it for things that people do not need.

vast-dom's picture

Yes. And let's not forget that the taxpayer funds this government criminal cartel and the fed. more and more it's looking like taxation without representation. tax only the banks and the corps and aide the economy and it's citizens.

oldman's picture

Dear vast-dom.


You vote, you pay your taxes, and you live in most powerful and wealthiest nation on earth---and you have the RIGHT to whine about criminals and such------get behind this stone and help us push it up the hill---come on, put some weight into it!

You're lucky! I'm exiled to a southern shore because of sentiments such as yours.

By the way, have you given anything to our proxy, OCCUPY?

I have----i'm too cowardly to return and face the fascists

good luck to you with voting and paying taxes for death and destruction. I don't and can find little sympathy for those who do             track me down feds, if you can              om

bpom's picture

If you do not vote, then you are part of the problem.  I suggest a tax and a fine for individuals that do not vote.

oldman's picture


"Yassuh, Yassuh, Yassuh----but Mr. Bossman---Mr. Bossman---I don't Has no money to pay no poll tax wid---I just won't be able vote, Mr, Bossman---Whatchall gonna do wid dis po nigga that can't fod to votre?  You ain'ta gonna trow'em in jail---is you, Mr , Bossman?"

I am not completely black nor white but a mixture, possibly, of red, black, and white---my brother and my daughter and I are still trying to get the black family to own up, but they won't talk about it.

But, you know what, dude? The fucking poll tax was outlawed before this oldman was born in most of the US--and you want to bring it back?

God help this country---what the fuck mis going on with you people?

Never mind---I'm sure it is probably just this oldman who is off the rail  

Please excuse the ring, bpom



bpom's picture

Why let your blood pressure go up, Oldman?  What is this about poll tax?  Why play a racist card so early in the dialogue?  I did not suggest that people pay to vote, I suggested a penalty for not voting.  Another point of discussion is providing a monetary payment and incentive after voting.  The payment could be a tax credit or maybe someone hands out $1 bills at the polls.  Implement a penalty for not voting and a reward for voting.  There should also be a system to check the accuracy of the vote count.  Letting a hackable, virus-infected black box spit out the voting totals is surely begging for corruption.    Make voting participation 100% and free of corruption.  A plutocratic minority would be unable to hold power.  So, Oldman, relax, cool your jets, chill out, hone your linguistic tools of fucking thought, and reflect on how to improve the situation.

Offtheradar's picture

Voting?  Are you fucking serious?  Please get smart already. 

Ex-Pat's picture

Why would anyone want to live in a democracy of non-voting cretins?

AndTheRest's picture

Voting grants implied individual consent to the actions taken by those in power.  Non-participation in "the system" allows one to deny that they approve, on any level, actions taken by their government.


Choosing from the pre-approved Red/Blue team candidates allows the ruling elite to claim that they were democratically elected and have the consent of the governed.  Having the consent of the governed is incredibly important to maintaining the illusion of Democracy and moral superiority in the Anglosphere/New World Order.


Why do you think the FBI and others still profile people based on their voting record?  Being a voter shows you have faith in Democracy, and believe in "the system."  Non-participation is the only way to withdraw your consent.  Voting for 3rd party candidates just flags you in their systems, but is still a form of consenting to their rule.


If you vote then you are allowing the individuals eventually elected to office to claim that whatever action they take includes your consent as a voting person in the Democratic nation they rule.  Voting for "the other guy" does not grant you the right to claim that whatever the government does is not your fault.


This is the reason that there are constant drives to "get out the youth vote" in Western nations.  Many nations have national holidays, or require employers to allow employees to go and vote by law.  Non-participation on a large enough scale calls into question whether those in power truly have the consent of the governed.  The last act of desperation to maintain a claim to legitimate government is to make voting mandatory by law or non-participation a fineable/taxable offense.

DosZap's picture


IF you do not VOTE HOW do you expect ANY change?, example RON PAUL?

IF he is to have a chance you must VOTE.

AndTheRest's picture

I'll cast my vote for Ron Paul, and by doing so I will be granting defacto consent to whatever Obama does in his second term at the behest of his masters.  Attacks on the second amendment?  Check.  Using tactical nukes against Iran?  Check.  Assassinating American citizens?  Check.


That's why a month after I cast my vote, I will no longer be in the United States.  And I won't be back.

DoChenRollingBearing's picture

Dear oldman:

WOW, you took the big step, good for you.  Be careful about coming back if things get ANY WORSE!


oldman's picture

Do Chen

Not a very big step for a guy who wouldn't work, wouldn't be a consumer, and knew how to fill out his taxes ans wasn;t afraid of his government

It was easy except for culture-shock which I still bump into after 20 years

I come and go------US Canada France Turkey Iceland

All that 'list' stuff is bullshit------there's so many lists there is no way they can keep up with you unless you have a cell which I don't nor do I travel with a computer

I'm tired of war, my friend and that is all my countrymen want

With all of the problems and rants about them here at ZH----a paragraph about our going to war turns the pack on its heels as it always has and off they go ready to kick some smaller country around. Never the Soviet Union, China, North Korea--------------Do you think the US would threaten Iran if Iran had a single nuke?

Think about it       om

DosZap's picture


And let's not forget that the taxpayer funds this government criminal cartel and the fed.

Not anymore, the Fed and the POTUS are funding the show, w/out ANY of our input.

The taxes they  have recieved from us pays nothing execpt interest on what Bernie has spent already.

A Lunatic's picture

So you have a mortgage free home, a few paid of cars, a boat, and a life insurance policy and there is your "million dollar estate"..........all shit that was bought with whatever the thieving scumbag cocksuckers so graciously let me keep from my hard earned pay. This shit pisses me off.

bogey4's picture

Actually, the proceeds of the life insurance policy are tax free to your heirs. 

And there's very little doubt that the estate tax limit will stay where it is - you can relax.

oldman's picture


Freedom is not FREE----some brave souls pay for it with their lives, but


and all of us at ZH to keep you company          It wasn't like that when 'LOVE IT OR LEAVE IT!' was in vogue

no one would even listen without calling you a commie or a fag or a nigger or a woman    

you remember those days don't you?  they used to come out of the mouths of some of the same redncks on this wonderful blog          I'm certain that I must have met some of you              om

LowProfile's picture


And you use a pseudonym.

Sure, freedom of speech.  ...Just watch what you say.


oldman's picture


You seem very familiar

You wouldn't turn me in, wouldya'

I watch very carefully what I say

But, I am not a shit eater. dude

and 'oldman' is not a pseudonym(had trouble spelling that one)

That is what they call me here         om

ExpendableOne's picture

As long as the locals can tax your property, do you ever really "own" it?

booboo's picture

but he still keeps the wife and kids? Man, let me think that over. 

ACP's picture


Nice one, Al Bundy.

Asher88's picture

Should we be/act surprised that our "government" wants to continue and expand on punishing successful and responsible people? I mean really, what is the incentive for me to work harder and make more money when I can accomplish the same payback by working less and getting more tax credits? It's not my fault that those 'evil speculators' are trying to take advantage of me!!!! (sarcasm intended)