In a speech in New York City today, Hillary Clinton set forth a proposal to increase the holding period needed to obtain the lower tax rates applicable to long-term capital gains. Her proposal apparently applies only to that portion of a taxpayer’s income that would otherwise be taxed at the 39.6% tax bracket. For 2015, this would apply only to income in excess of $464,850 for married taxpayers filing jointly and $413,200 for single taxpayers.
Hillary’s proposal extends the one year holding period for long-term capital gains rates to a two to six year period, with a sliding scale to obtain the lower long-term capital gains rates:
after 2 years, 36%
after 3 years, 32%
after 4 years, 28%
after 5 years, 24%.
After a six year holding period, the long-term capital gains tax rate for the capital gains in excess of the highest tax bracket threshold would be taxed at 20%, as it is now. Of course the capital gains would still be subject to the 3.8% Obamacare tax on net investment income, the approximately 1.2% impact of the “Pease Tax” and any state income tax that might apply. It is a fair presumption that these higher rates and holding periods would also apply for purposes of Alternative Minimum Tax, but that the higher rates would not apply to qualified dividends, since there is no holding period for dividends.