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| Author: | Amity Shlaes, Senior Fellow for Economic History |
|---|
December 31, 2008
Bloomberg.com
To a lot of investors, 2009 looks like twilight at the bottom of the ski run. Ahead is the icy walk down to the parking lot and the challenge of maneuvering the car out of the resort without crushing someone's fender.
Even the gloomiest among us can take comfort in knowing that there is one group for whom 2009 is all early morning and fresh powder. That group is young investors, especially the truly young--18, 19, 20. They have no losses to straighten out. They can pick up real estate at prices unseen for years. They can collect stocks at prices inaccessible to their forerunners.
All they have to do is bend their knees and keep their skis straight and it will be compound, compound, compound all the way down the mountain.
Or would be, but for a levy discussed mostly in the personal-finance columns. It is the Kiddie Tax.
The tax applies to so-called unearned income, from dividends, investments and capital gains. Back in the 1990s and the early part of this decade, children under 14 who had such income paid taxes at the parental rate. Teenagers or college students, however, were taxed at a much lower rate.
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