Don't Forget Those Federal Taxes...

Not long ago, I preached a word about growth in the Stock Market. Yet from the glimmer, hope and opportunity I painted, there was a missing part to this journey toward prosperity: TAXES. Although no single "investment" should ever be based solely on the confiscation of capital appreciation or dividend income, it must be considered when planning for retirement or other long-term plans.

Recently our Congress enacted beneficial capital gains legislation which would not only lower the maximum rate per taxation bracket, but also reformed the distinction on short-term and long-term capital gains. A capital gain is realized when the selling price of a stock or other hard asset is greater than that of the purchasing price of the former investment. Because assets held for over one year and one-half will be taxed at a maximum rate of 20%, it will greatly benefit the individual or company seeking patience in their investment endeavors. Assets held less than the time stated will be taxed at ordinary income.

Considering the fact that Washington fails to calculate the rate of inflation into the total tax due upon such a capital realization, the capital gains tax cut was long over due. It is also time liberal members housed in our government institutions admit that investment isn't just for the Warren Buffets of America. Despite a statistic from The Wall Street Journal that approximately one-third of all households own mutual funds, ignorance still persists.

However, with a lower rate, new opportunities are in the makings for young and old alike. For those ready to withdraw their funds, the reduction couldn't come at a better time. Let's not forget whose funds are whose. They do not belong to administrators of pork barrel projects. They do not belong to toll workers. They do not belong to bureaucrats at the Environmental Protection Agency. They belong to the risk takers of venture capitalism and the risk takers only. Oftentimes (usually by default) we take it for common that 20% is Washington's. This is not the case.

In the future we, as the greatest country for the progression of capitalism, should seek additional reforms to help individual Americans reach their dreams of fortune and wealth. It is not uncommon for such capitalists to naturally gravitate toward such activity. In that light, then, government should not act as an impediment or negative externality. Remember government is not a living and breathing organism--it is a mere, social contract initiated by the people who expect and deserve rational-minded thinkers in control of this privilege. Don't let us down.