Every two years Americans have the right to vote for a new bunch of politicians. Many of these elections have unforeseen consequences which many voters don’t even fully understand. For example this midterm election coming in November will be extremely important on many fronts.

Obama has had the ability to make several major changes with the help of the Senate and House of Representatives, who have a majority of members who are Democrats. Obama has many plans for the country, and if the Democrats win the majority in both the House and Senate once more, these plans will likely become reality. If, on the other hand, the Republicans take the House, the Senate, or both, than most of Obama’s agenda will be blocked.

One of these plans that Obama has is to allow the Bush tax cuts to expire. If they expire, the current 15% flat rate for capital gains and dividends would rise sharply. Capital gains tax rates would rise 5% to 20%, while the dividend taxes will no longer be a flat rate, and instead depend on your income, meaning rates up to 39.6% If you have money in the stock market, than you know how much damage this could do. If the Democrats win the mid terms, than the stock market would drop, possibly a good amount. If dividends and capital gains are to be taxed at an increased rate, than there will be a large exodus from the market prior to the tax cuts expiring. On the other hand, if the Republicans take the House or Senate, than the stock market will likely go up, reassuring investors that the government won’t be taking as much of their stock gains.

Either way, the midterm elections should be exciting, especially if you are aware of all the consequences involved.