In this InvestorPlace.com article, Brad A. Badertscher, CFA, assistant professor of accountancy, explains the finer points of the tax debate and what it means for stockholders of all sizes. To read the entire article visit: 2012 Could Hold Big Tax Changes for Investors.
For investors, what does it mean to “pay your fair share” in taxes?
Much has been made of the fact that Warren Buffett pays a lower effective tax rate than his secretary – in large part due to the difference between investment income subject to long-term capital gains taxes vs. conventional wages subject to graduated income tax brackets.
That’s because an investment held for over one year is taxed as a long-term capital gain at a 15% rate (at least as of 2012), and investments held less than one year can be taxed up to 35%.