What Does The Election Mean For Your Money?

In a minute, we start to answer the question that headlines today’s edition of The Juice. 

But first, we have a prediction. 

In July, Nvidia (NVDA) crossed 1,000,000 pageviews in Trackstar, our proprietary database that gauges investor search interest across the platforms of our 100+ financial media partners. With the company set to report earnings after the close on Wednesday, we think NVDA hits a million views again this week. 

If you look to the top of the page, you’ll see NVDA has nearly triple the views of #2 Tesla (TSLA), #3 Apple (AAPL) and #4 Amazon.com (AMZN). Makes sense, given that NVDA has been the clear leader among the Magnificent 7 and most other tech stocks. Also makes sense because stocks in Trackstar tend to move — on the basis of search interest — just ahead of big moves on Wall Street, which gives us a solid tool for finding trending tickers and sound investments. We use Trackstar to that end here in The Juice and in our sister newsletter, The Spill. 

No matter what happens, The Juice will have thoughts on the earnings report — that is being called one of the most important ever in tech — on Thursday morning. And, as always, we’ll relate the news not only to what it means for the AI space, but what it means for your money. 

Your investing. And your pocketbook. 

Speaking of your investing and your pocketbook, between now and November, expect The Juice to cover how this election might impact your money. While it’s true — the stock market goes up over time regardless of what happens in Washington — policies floated by candidates, if they become law, absolutely can affect your personal finance and investing. 

For example, the capital gains tax, which is what we start with today. 

There has been a lot of talk about Kamala Harris supporting a plan to tax unrealized capital gains. Before we detail what the proposal actually contains, let’s cover some basics on capital gains. 

Unrealized capital gains represent the increase in value of an asset, such as a stock, that you have yet to sell. Realized capital gains are simply the profits you reap when you sell an asset, such as a stock. Inversely, you can have a capital loss, which you can use to offset capital gains. 

As the Internal Revenue Service (IRS) explains, “If your capital losses exceed your capital gains, the amount of the excess loss that you can claim to lower your income is the lesser of $3,000 or your total net loss … If your net capital loss is more than this limit, you can carry the loss forward to later years.”

The IRS classifies capital gains as short-term (on assets held for less than a year) and long-term (on assets held for one year or more). 

Currently, Uncle Sam taxes short-term capital gains like ordinary income. Based on your tax bracket. If you trade stocks or simply sell a winner with a sub-one year holding period, this matters to you. Therefore, something like a middle class tax cut (which The Juice will cover in this series in September) can impact your trading and investing. 

In a nutshell, a big short-term capital gain could push at least part of your income into a higher tax bracket. And, of course, a cut to tax rates could decrease the tax due on short-term capital gains. 

The IRS gives long-term capital gains preferential treatment. 

Here’s how it works, directly from the IRS:

A capital gains rate of 0% applies if your taxable income is less than or equal to:

• $44,625 for single and married filing separately;
• $89,250 for married filing jointly and qualifying surviving spouse; and
• $59,750 for head of household.

A capital gains rate of 15% applies if your taxable income is:

• more than $44,625 but less than or equal to $492,300 for single;
• more than $44,625 but less than or equal to $276,900 for married filing separately;
• more than $89,250 but less than or equal to $553,850 for married filing jointly and qualifying surviving spouse; and
• more than $59,750 but less than or equal to $523,050 for head of household.

However, a capital gains rate of 20% applies to the extent that your taxable income exceeds the thresholds set for the 15% capital gain rate.

So, not terrible really. The key is to invest for the long-term and mind these numbers. 

Remember, all of this pertains to realized capital gains. 

The plan to tax unrealized capital gains isn’t nearly as wide-ranging as the headlines blare. In fact, there’s a good chance the plan, if enacted, will not affect a soul in The Juice’s rather large subscriber base. 

The ultra-wealthy would be impacted and this doesn’t necessarily include many of the big tech founders who have backed Donald Trump. 

• You would pay a tax on unrealized capital gains only if you have a minimum of $100 million in wealth and do not pay, at minimum, a 25% tax rate on your income, including unrealized capital gains. 
• From there, you would only pay the tax if, of your $100 million in wealth, 80% is in the form of tradable assets. So this doesn’t include equity in a private company or real estate. 

The Bottom Line: This is a way to make the super rich pay their fair share. You hear all of the time how some wealthy individuals find ways to pay less tax than everyday Americans. While not necessarily a perfect or the only solution, this particular tax on unrealized capital gains would help right that wrong. It would hit the wealthiest taxpayers who use loopholes — even if perfectly legal loopholes — to lower their tax bill. 

And, make no mistake, The Juice thinks the disgustingly wealthy need to pay more. People who have so much money they don’t know what to do with it should be paying more in taxes in support of the rest of us. To benefit the greater good. 

So, don’t listen to the hyperbole, this proposal, if it sees the light of the day, will have literally zero bearing on your trading or investing.

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