2 ms·
I don’t think the math works that way. Suppose your return is 35% after paying the long term tax rate. This implies your pre-tax return was .35/(1-.25) = 46.66.
by djakjxnanjak 8y ago
I don’t think the math works that way. Suppose your return is 35% after paying the long term tax rate. This implies your pre-tax return was .35/(1-.25) = 46.66. Now instead pay the short-term rate and get 46.66 * (1-.4) = 28%. So the return drops from 35% to 28%, which is still mind-boggling (even 20% over decades would be extremely impressive).
- chollida1 8y agoYes your right, you'll even notice I made up the tax amounts as I was on my phone. The point I was trying to make is that the tax rate does significantly affect the returns and once accounted for puts them back in line with some of their peers if account for this.