Capital Gains Importance
Last big peak of PIT was in 1998. Capital gains in tax year 1997 grew 45% over 1996. Only 7% of ’97 AGI, CG was about 23% of ’96-’97 growth.
Capital gains have been known to drop by as much as 50% in any year.
Hard to know how a market drop affects short and longer-term picture for capital gains:
- Small drop could lead to locking in of long-term gains.
- Big drop mean a quick turn-around from gains to losses for investors and states.