How to prepare your investments if taxes go higher because of the fiscal cliff, with Mario Gabelli, GAMCO Investors chairman & CEO. In a prior interview, Mario Gabelli stated that he believes we would in fact go over the cliff. Below is the video in which Gabelli says that there is no way to prepare for it.
Video and computer generated transcript:
Livermore Strategic Opportunities February 2021 Update
Livermore Strategic Opportunities, LP performance update for the month of February 2021. Q4 2020 hedge fund letters, conferences and more Many of you are witnessing first hand that our country, economy, (and now stock market) are all very fractured and becoming extremely challenged. Therefore, our hedge fund's theme remains focused on specific sectors and companies. Read More
this market is down about 5% since the presidential election. of course, worries and uncertainty about whether or not we’ll go over the fiscal cliff largely viewed as the main culprit as well as the uncertainty over where tax rates will be. my next guest says we are going off of the cliff. joining me now is mario Gabelli. he joins me here at the Schwab impact conference in Chicago. maria, my privilege. let’s talk about it. your take on the markets and fiscal cliff. i want to begin there. it’s pretty simple. in September of ’08, the market went down when they couldn’ prove the t.a.r.p., and you watched it on television on the votes being take. the same thing in july and august. i can feel it with individuals i talk to everywhere. they’re worried about this unstirn over how much taxes are going to be taken out of their capital gains and dividends. they’re unclear about how the president is going to lead the country. the first words out of his mouth were divisiveness. they’re uncomfortable. then you have the cliff. you have a lot of finger pointing once again. let’s talk about, you know, the cliff. i know you remain bullish on this market. you’ve got to assume the Chinese government are going to step on the accer with regards to consumption. they’re taking power in march, if not sooner. in addition to that, there’s an element of uncertainty in europe. in term of what is going on in the united states, the economy is improving. there will be a penalty based on this uncertainty right now. in the business sector, it’s very clear. it’s been going on for months. one way or the other, let’s get on with the next five years. what’s your strategy in terms of your tax strategy? let’s say i assume we go over the fiscal cliff. dividend taxes go higher. capital gains taxes go higher. what do we do? let’s do is in a mosaic. first of all, we have to make america competitive. we have to get rid of some of the taxes these lobb debate. my sources tell me the loopholes and exemptions leave $1 trillion on the table. let’s go over the math. the math is that we as a country spend 3.7. we take in 2.7. 400 billion of that is from corporations. the notion of deferrals, defer now, pay later, is very fundamental. it’s a 101 of a book plan. to the degree obama wants to make the united states more competitive, he’s talked about a 28% minimum reduction in corporate taxes. he’s talking about taking it down 25 for u.s. manufacturing. that’s a very positive step. i don’t have him talk abou that at the moment, to create jobs, quality jobs. tax reform, raise taxes if you have to. raise revenues.lower the deficit get us on with the dynamics of running a business. but here we are — by the way, someone whisperedto me as i was coming up, if these guys don’t want to work in washington, they shouldn’t get paid. i’m not going to subscribe to that premise — so this person said to you until these guys get a deal done, don’t pay them? yeah, don’t pay congressmen,politicians of any kind, including their staff. ware they doing any way? they’re very thoughtful. they’ll find a compromise. going into year end, we assume taxes will go higher. should i be doing anything different? should our audience be doing anything different? i have a fundamental philosophy of deferred growth and return earnings on capital. i’m assuming my tax rate goes from 15 to 20 on long-term capital gains with a 3.8% surcharge for the affordable care act, that’s 45% on long-term capital gains. on top of that, dividends are not clear. clearly, do i want to mark up a portfolio? i can sell for a profit and buy it back immediately and pay the tax. in losses, you can’t do that. on the other side, if you lose more than $3,000 in 2013, you can’t deduct it. so there’s not — there’s unfairness in the tax code that individuals don’t like to talk about. then i h someone suggest taxing 90% of my social security. barney frank just said that. i don’t mind taking my social security. i put it a lock box.