Capital Gains Taxes - Should they be abolished?

[Adam Smith]

Roland:

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

Thinking off the top of my head, the difference in income should compensate for that.

But don't you macro types assume homogeneous labor and capital anyway??

[Rogan Josh]

Originally posted by Roland
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.

Hmmm... I'm confused now, because I thought that was how it worked for investments too. Are you saying that loan interest and dividends and the like are not tax deductable?

[pchang]

Germany

Did someone already mention that in Germany, the tax rate on capital gains (long term) is 0?

[Berzerker]

David Floyd -

You people are a bunch of thieves

Nah, it's just a simple case of one group of people having a "moral" mandate to force others to work for them.

[9 ECAC Titles]

The flat tax issues and the regressive/progressive tax structure issues are different.

I can't see the argument for blowing CGT away, other than another obvious giveaway to the wealthy (among who I hope to be someday, at which point I'll suddenly see the light).

I'm in favor of allowing people a CGT exemption in the same way that they get an income tax exemption. Let the first 10k CG be tax free, then tax the rest.

Note that this would encourage small investers, but not seriously dent revenue nor proliferate loopholes.

[Goingonit]

Stock makes the world go round. Without investment, the workers at Enron wouldn't have lost their life savings - but without investment, those worers wouldn't have had a job! Like it or not, our society is built on borrowed money - money raised from banks and shareholders - and without it, the Industrial Revolution would never have occured. Discouraging investment is a barrier to progress, innovation, and the continued wellbeing of our society.

[chequita guevara]

If capital gains discouraged investment, there'd be no investment. If income taxes discourgaged people from getting rich, there'd be no rich people.

[Victor Galis]

Personally, I definitely think so, given the fact that it is simply a way of a)taxing a person twice,

How so?

b)punishing a person for doing well in the market, and, to a lesser degree

Are you on crack?

c)discouraging investment.

You know, roads and police protection aren't exactly free. The state also does plenty of things that make stock markets possible.

And no they should not be abolished, though I personally would like to see the first $5000-$10000 of each person's capital gains get exempted, for the benefit of middle class investors.

Why? It's already been taxed before being placed in investment.

-No. Imran, the tax is only on the gains. i.e. the amount you make through this investment, not on the original ammount that was taxed.

As it stands, taxing the rich at a higher percentage than the poor is blatantly and entirely unfair and immoral.

-Some people would say that it is unfair and immoral for some people to make more than others. And others might tell you that you'll be among the first against the wall when the revolution comes

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

-You need to get past this rhetorical nonsense.

The only fair income tax is a flat tax.

-You mean the tax that would have to starve the poor to provide the services that the govt. provides now.

Moving along, though, capital gains tax is unfair because the money you put into the market has ALREADY been taxed.

-This is why it isn't taxed. Only the gain is taxed.

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.

-I actually paid this tax last year. Only form of income tax I paid, and you don't hear me whine.

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.

-You seem to assume that the money you are making is in some way related to the money the company is making, which at least for the last couple years has not always been the case.

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.

-Aren't house sale gains tax exempt anyway? (Well at least the first sale every 5 years)

[Adam Smith]

Chegitz:

Your rejoinder is far too simplistic. The issue is a matter of degree....not NO investment, but less than there otherwise would be.

Victor:

You seem to assume that the money you are making is in some way related to the money the company is making, which at least for the last couple years has not always been the case.

Huh?? If you invest in the company, and they do not make money, then you do not make money. How can that NOT be the case?

I used a house as an example. Gains on houses are exempt. Other gains are not.

edit: response to Victor's simultaneous post.

[Dauphin]

Originally posted by chegitz guevara
If income taxes discourgaged people from getting rich, there'd be no rich people.

In the 1970s when income tax was 97% on top earners (~£1,500,000 per annum IIRC) a lot of people just left the country. It doesn't discourage people getting rich, it just discourages them getting rich in your country. The net effect is less income for the country, and less tax revenues.

[Victor Galis]

"Huh?? If you invest in the company, and they do not make money, then you do not make money. How can that NOT be the case?"

-See Amazon.com. Lots of people made money off of it, though IIRC it has yet to have a profitable quarter. Also it is entirely possible to sell short and make money off of a company losing money.

[axi]

It doesn't discourage people getting rich, it just discourages them getting rich in your country.

Then we should stop them from pulling the capital out of the country, or force equally high taxes all around the world. Which one do you prefer?

Smash Capitalism!

[9 ECAC Titles]

> In the 1970s when income tax was 97% on top earners (~£1,500,000 per annum IIRC) a lot of people just left the country.

In the US, the top bracket tax rate was at its highest in the 1940's through the 1960's, the golden age of the US economy.

Also worthy of note: during the same period, corporate taxes were also at their highest.

Progressive taxation helps the middle class, especially the lower middle, the most. A strong middle class equals a strong economy. Or perhaps you're going to sell all your goods and services to the 1% who would benefit from a flat tax?

[David Floyd]

Guys, I'm not talking about expediency and efficiency. As berzerker says, I don't care about those. I care about right and wrong, just and unjust.

[pchang]

In that case

You should just move to Germany and stop worrying about all this capital gains stuff.