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Clint Stretch, Deloitte Tax managing principal, on the odds of capital gains taxes reaching 20% if Congress fails to act.
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The Senate Finance Committee and a house Ways and Means Committee held a joint hearing on tax reform and what to expect with capital -- capital gains tax.
Well currently we're taxed at 15% but that's set to go up to 20% next year members of congress just can't reach an agreement.
So will -- Joining us now Clint stretch former managing principal with Deloitte tax.
Click I love that you hear but I also feel like it stays at Lucas every time we -- we just said a front -- -- to the future.
Absolutely -- this is.
A long standing issue in our tax policy discussions and now it's complicated by the prospect for tax reform -- were either gonna extend the bush tax cuts 15% or we're gonna let them expire.
Gonna be 20%.
Got a new possible insurance tax on top of it.
But if we do tax reform I think what committee heard this morning -- those capital gains rates are gonna have to go up even more.
So and you mentioned the -- about health care tax three point 8% on investment incomes for families making over 250000.
Is it because -- the wealthy do pay so much of their tax bill to capital gains that this has become a real point of contention.
What is and -- I'm not sure that I would say that the wealthy pay so much in capital gains but you got.
Two kinds of wealthy people -- got doctors lawyers movie stars so TV anchors who make a lot of money and pay tax at 35%.
Then you got people were predominately investors in their 15%.
-- really detention.
-- you expect anything to happen before the election.
Absolutely not.
And now we heard senator creep -- earlier thinking that -- gonna happen in lame duck session do you.
I think.
In the lame duck session the best we can expect is that they can kick the issue down the road a year that they say let's extend the bush tax cuts for six months a year.
Give congress time to work on tax -- see where they want to come out on that.
I think members are very worried about the fiscal cliff as we all are.
And so they're gonna try to get by that push that down the road and then deal with taxes -- -- more substantive way to make sure that's my guess what we could have some problems that your.
But that's for the -- -- comes in because you're referring to all the Extenders as well the AMT the child tax credit dependent care credit.
They punted last time an extended.
And here we are again we're talking about extending what I mean are we ever gonna see true tax reform in this country -- we need it.
We're we're gonna have to do -- to stabilize a system you look.
Not the bush tax cuts just a regular Extenders and prefecture R&D tax credit that's 200 billion dollars for one year.
That's equal to two years -- sequestered so certain kinds of money we're talking about we have got to figure out what tax code we want and make it permanent.
So that we can solve the other more important problem which is the deficit.
Thank you.
Comb through this tax code over the years do you honestly think it can be fixed.
Or does -- need to be just the run out the window and we need to start over.
It -- actually would save the other way I think it has to be fixed I don't think we can throw -- out the window.
How do you say to people look we know you bought a house expecting a mortgage interest deduction.
We we know that you think -- church is important wanna give money to a -- not gonna support any of that anymore because you're going to be happier with a lower rate.
I think we've got to find a way to incrementally change the current system make it.
More fair have a lower rate broader -- -- we can't throw the economy into turmoil right now.
And I mean I guess the good news Clinton is that they will -- -- here.
And that everything will be status quell and you have to come back we'll talk again Clinton's debt plus it's all right -- next Hanks Clint -- entirely in his lately things are.
