When President-elect Barack Obama was Candidate Obama on the campaign trail, there was talk of raising the tax level on long term capital gains from the current 15% to as high as 29% but soon became 25%. It has not been that high for quite some time.

Obama was challenged by this throughout the campaign and it was one of the questions he faced in the presidential debates. He had to answer a direct question as to why he would raise this particular tax in light of evidence that the reduced rate had benefited the government coffers and investors. He replied that he was interested in balancing the budget and fairness in the system, but that he would be weighing all of the issues under discussion and he might temper his opinion.

Well, as I recall, toward the end of the campaign he tempered his opinion all the way down to 20%.

Now what brings this to mind as we close out the year is that I have been reviewing 2008 with my accountant and making projections for the purpose of last minute adjustments I might need to consider. As we were discussing capital gains for 2008 we, like many of you reading this, discovered there would not be any. The losses outweighed the gains.

Then I started thinking about Obama wanting to raise the tax and realized he could raise the tax to 100% because this year and next many people may not be paying any due to their accumulated losses. As a matter of fact, in extreme cases some folks may not be paying any capital gains even if he is in office eight years.

Sheldon Liber is the CEO of a small private investment company and the principal for design and research at an architecture & planning firm. He writes the columns Chasing Value and Serious Money.

Beltway Banter: The quick, initial read regarding U.S. Representative Charles Rangel's (D-New York) hedge fund/buy-out firm tax bill introduced Thursday is that the measure, as composed, would produce a certain veto from President Bush, but that the Bush Administration may be willing to work on a revised Rangel measure.

A revised bill, provided it successfully snakes its way through the U.S. Senate, may be legislation President Bush can work with, as a way to solve the alternate minimum tax issue. Designed to prevent wealthy Americans from paying no tax via tax shelters, the AMT -- due to inflation -- applies to a larger number of upper-middle-income Americans each year. Without an AMT patch, 21 million households will be obligated to pay the alternate minimum tax.

U.S. Rep. Rangel's measure would more than double the tax rate on carried interest, the executive compensation at buy-out and venture-capital firms, and would require hedge-fund managers to pay tax on income they defer in offshore accounts, among other bill features.

U.S. Rep. Rangel calls his bill "the mother of all tax reforms." Republican leaders disagree. In a statement, they called the bill, "the mother of all tax hikes" and assert that the bill would raise taxes by $1 trillion over a 10-year span, Reuters reported. Rep. Rangel countered by saying that U.S. Treasury Secretary Henry Paulson had recommended the business tax changes.

You probably won't be surprised when you read today's Wall Street Journal and find out that the income-inequality gap is widening. The wealthiest Americans in the top 1% earned 21.2% of all income in 2005, according to data from the IRS. That's a lot different than in 1986 when the top 1% of earners earned 11.3% of all income earned.

What do you have to earn to be in that top 1% bracket - at least $364,657. People in this group also saw the biggest jump in income. Their 2001 income in current dollars was at least $292,913, which means a $71,744 increase during the five year period or 4.9% per year. There were 1,316,116 tax filers in this bracket.

Next group of earners tracked are the top 5%. (The IRS tracks this cumulatively, so the top 1% is included in the numbers.) The top 5% earned 35.75% of all income in 2005, so those between 1% and 5% earned 14.55% of all income in 2005. To be in this bracket, you would need to have earned between $145,283 and $364,656. People in this group saw an income increase in current dollars of at least $17,379 in earnings between 2001 and 2005, or a 2.7% increase per year. There were 5,304,466 tax filers in this bracket.