Archive for January 8th, 2013

Financial math: Capital gains tax rates are going up 8.8% … So, how much will after-tax capital gains go down?

January 8, 2013

This is a relatively simple financial math question that most people I’ve asked have gotten wrong.

Answers have ranged from less than 8.8% – since only capital gains are being taxed (huh?) … 8.8% – because that’s how much the marginal rate is going up … to more than 8.8% – “otherwise you wouldn’t be asking the question”.

First, what’s magic about 8.8%?

Well, Obama did what he promised and jacked capital gains tax rates from 15% to 20% … and, don’t forget ObamaCare has a 3.8% non-payroll payroll tax on investment income starting in 2013.

So,  the effective capital gains tax rate is going from 15% to 23.8% … a delta of 8.8%.

That 8.8% increase will cut after-tax capital gains by 10.35% !

If you don’t believe me, here’s he math …

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Posted in Capital gains - taxes, Finance, Financial Analysis, Financial math, Fiscal cliff, Taxes | Leave a Comment »

Bid & Ask: Are new graduates ready for prime time?

January 8, 2013

Just read an interesting McKinsey study: Education to Employment – Designing a System that Works.

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The focus of the study:

Worldwide, young people are three times more likely than their parents to be out of work.

Paradoxically, there is a critical skills shortage at the same time.

In other words, there are two related global crises: high levels of youth unemployment and a shortage of people with critical job skills.

This report focuses on skill development, with special attention to the mechanisms that connect education to employment.

More specifically:

  • Seventy-five million youth are unemployed
  • Half of youth are not sure that their postsecondary education has improved their chances of finding a job
  • Almost 40 percent of employers say a lack of skills is the main reason for entry-level vacancies

An obvious conclusion: employers need to work with education providers so that students learn the skills they need to succeed at work

The pivotal finding: Employers, education providers, and youth live in parallel universes.

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Posted in Academics - Research, Education - Academics, Jobs - Unemployment | 1 Comment »