Capital Gains Taxes - Should they be abolished?

[Kassiopeia]

Originally posted by Grrr
We NZer's don't have em, so this is an ambiguous arguement!

Nor do Finns

(At least not much )

[DinoDoc]

Originally posted by axi
Tax them for all they've got!

IRS data shows that the top 1 percent of taxpayers in the USA pay aproximately 36 percent of all federal income tax. The bottom 50 percent of wage earners pay just 4. It looks like we are already taxing "them" for all they've got to the extant we can without going completely socialist.

[Bugs ****ing Bunny]

Originally posted by Richard Bruns
Capital gains are taxed at a lower rate than income. This means that the government takes money you work for at a higher rate than money you don't work for. :hm: It also creates lots of perverse market incentives and accounting loopholes, and makes it a lot more complicated to pay taxes. Capital gains should simply be counted as income.

That's interesting. In Britain, capital gains tax is actually higher than all but the top rate of income tax. British taxation policy has always been tougher on "unearned wealth".

[axi]

IRS data shows that the top 1 percent of taxpayers in the USA pay aproximately 36 percent of all federal income tax. The bottom 50 percent of wage earners pay just 4. It looks like we are already taxing "them" for all they've got to the extant we can without going completely socialist.

Yes, but how about the income of those groups? What part of the income does this top 1% get?

[David Floyd]

Who gives a **** about the income gap? As it stands, taxing the rich at a higher percentage than the poor is blatantly and entirely unfair and immoral. It's punishing the rich for being successful - or being born into a successful family.

The only fair income tax is a flat tax.

Moving along, though, capital gains tax is unfair because the money you put into the market has ALREADY been taxed. So what if you put it to work to get more money? That sounds like the American Way to me. And believe me, it isn't just the rich who pay it (although even if it was it would be just as wrong - the rich are people too) - middle-class white collar workers generally have some money invested in the stock market, and get hurt by this tax as well.

To all you people who want to "bleed the rich dry", "tax them for all they are worth", etc., all I can say is You people are a bunch of thieves, or at least you support theft, not only basic income theft, but an extra, punishing, unfair theft as well

[DinoDoc]

To back up David's last point, federal taxes as they stand now are at historically high levels consuming more than 19% of the US economy. At what point will we say that we have bled them dry? Once it reaches 25%? Or would you say that it should be even higher than that?

[Bugs ****ing Bunny]

David Floyd is right! Literally thousands of American children may not be able to go to Aspen or St Moritz this year!

[axi]

LOL@Bugs!

Taxes are not theft - Property is theft!

(eagerly waits to see enraged David Floyd choking on the foam coming out of his mouth)

[Rogan Josh]

Originally posted by David Floyd
Who gives a **** about the income gap? As it stands, taxing the rich at a higher percentage than the poor is blatantly and entirely unfair and immoral.

Why?

It's punishing the rich for being successful - or being born into a successful family.

How are the rich being 'punished' by having more money than the poor? Do you think that all rich people are rich because of their own skill and hard work and that all poor people are poor because they are incompetent or lazy? And why do you think that some people should have more money based solely on their genetic makeup?

[Adam Smith]

1. Capital gains in the US are subject to double taxation. Suppose youmake an investment and it earns some money. The company you made the investment is required to pay corporate income tax on that investment (IIRC corporate tax rate of something like 40 percent) before you even see one thin dime of it. Then, when it is reported to you as income, you pay a capital gains tax, which is someting like 20 or 28 percent depending on how long you held the asset.

2. By taxing capital gains more than regular income the tax code encourages consumption and discourages investment. And its not like you earned this money by doing nothing. What you are being paid for when you receive a return on an investment is that fact that you could have bought something right now with the money, instead of wating years for the investment to pay off.

3. I am in favor of abolishing the capital gains tax for all assets held over some set period of time, say three years. Retaining the tax for shrot term assets would help discourage short term speculation, which is not necessarily in the best interest of the economy.

4. Capital gains taxes should be adjusted for inflation as Lefty sugests. Suppose you own a house for 20 years, and you keep it in the same good condition for 20 years. Then you sell the house for much more than you bought it for. You still have the same house you started with, but most of the increase in price is due to inflation. No point in taxing this, since it is no real gain.

5. Income tax rates should, generally, increase with income. Why? Income taxes are generally a tax on labor. As people are taxed more, they will work less. However, as people's incomes increase, they tend to work less anyway because they take more of their time as leisure. Taxing high income people at a higher percentage of their income will cause less of a reduction in work for a given amount of money raised. Conversely, reducing taxes fro low income people will cause a proportionately larger increase in the amount they work.

6. Carried to its logical conclusion, the best policy is to have a negative income tax for low wage workers, and proportionately higher taxes for high wage workers. This gives low income workers further incentive to work, and minimizes the amount of labor lost for a given maount of money raised by the government.

edit: removing the curse of Apolyton

[Roland]

The return on capital should be taxed in the same way as the return on labour. It will be difficult at times to figure out the real return, and you'll need some exceptions for political purposes (eg the return on your house is the service of shelter it provides - try taxing that like rent income...).

The good thing about Austria's tax law: hold stocks longer than a year, and the appreciation gain is tax free. And no, I have no idea _why_ that is so...

AS:

"...and minimizes the amount of labor lost for a given maount of money raised by the government."

But you are replacing more productive labour with less productive labour here....

[Rogan Josh]

Originally posted by Adam Smith
1. Capital gains in the US are subject to double taxation. Suppose youmake an investment and it earns some money. The company you made the investment is required to pay corporate income tax on that investment (IIRC corporate tax rate of something like 40 percent) before you even see one thin dime of it. Then, when it is reported to you as income, you pay a capital gains tax, which is someting like 20 or 28 percent depending on how long you held the asset.

I don't see anything wrong with that. Imagine that instead of investing money with them, you sold them a machine part, and make a profit. You should be taxed on that profit, and the company who uses the part to make a profit should also be taxed on that profit. If you rent them the machine part, you should still be taxed on the profit you make.

Investing money with the company is just renting them some extra funds. The company makes a profit and is taxed, and you make a profit (from the 'rental') which is also taxed.

Your objection should really be that you have a bad agreement with the company. Your profit is dependent on how well they do, and the taxation of their profit reduces that, meaning that you get less money.

[Roland]

RJ:

"Imagine that instead of investing money with them, you sold them a machine part, and make a profit. You should be taxed on that profit, and the company who uses the part to make a profit should also be taxed on that profit...."

That's a different situation. If I make that part for 100 and sell it for 110, I should be taxed on the 10. If at the next stage a profit is made, my profit is deducted as a cost for that company. So each profit is taxed at its stage, but not one profit multiple times.

But when I invest 100 and the company makes a profit of 10 on that, itis subject to say 4 in corporate tax, and the 6 I get are subject to say 2 in income tax.

[OneFootInTheGrave]

No.

I'd say that this would make the gap between rich and poor even greater.

I guess if you are working calss you can't affrod to invest and if you have modest sums of money to invest it is still Ok if 25% go away. Not to mention if you are rich and you get paid in stock options when you execrise them you pay 40% but on any gain you pay further 25%. That would work well for me if I was rich. Perhaps all taxes should be lined up according to your personal level of income but that would discourage investment I'd say.

[Dauphin]

Originally posted by Bugs ****ing Bunny


That's interesting. In Britain, capital gains tax is actually higher than all but the top rate of income tax. British taxation policy has always been tougher on "unearned wealth".

Actually the rates are the same/less. The lower and upper tax rates are the same. The basic rate is lower by 2%.

AND once you take into account the fact that you don't pay national insurance on top of CGT (an additional 10%), the overall amount creamed off by the government is much less. This, even without the allowance for CG, which transferable to spouses, which is £7,500 (x 2 if you have a spouse to transfer it to) against £4,535 for earnings.

From a tax perspective, it is better to have CGs than earnings.