capital gains tax

[zach347]

I understand a lot of people are angry when they learn how the tax system works for the wealthy. Some people spend many years of their lives just trying to develop a system where the bulk of their income is considered capital gains and is therefore taxed at a much lower rate. However, As a regular chump that receives no income from capital gains, I’m not especially upset about this. I mean, someday, I’d like to take advantage of the same tax code!
I have a suggestion to maybe appease both sides of this political hot button issue and I am wondering why no one in the government has approached the issue from my point of view.
Lets keep the capital gains tax at 15 % to a certain amount, lets say 500K annual, and all income above that is taxed normally.
I might be way off here because I’m not an economist or a tax pro, but wouldnt my suggestion still encourage investment by giving the little man incentive to get in the game and at the same time increase government revenues?
Also, we can start to maybe put a simmer on this whole class warfare bs.

[SK in CV]

Little people don’t need $500K of annual capital gains benefits. They don’t have any assets to get into the game. I’d suggest that if preferential tax treatment is an incentive, then 10% of that number would be sufficient.

Why do you think class warfare is bs?

[ucodegen]

Don’t forget the aspect of AMT that kicks in if you have a lot of long term capital gains. There is a minimum % that checked under AMT.

To do it right, you need a mix of short term, taxable as income and long term, taxable as long term capital gains.

[SK in CV]

[quote=ucodegen]Don’t forget the aspect of AMT that kicks in if you have a lot of long term capital gains. There is a minimum % that checked under AMT.

[/quote]

No, it doesn’t.

[scaredyclassic]

everything that can potentially benefit me seems to get phased out for income right about my level.

so why no phase out on capital gains?

[CA renter]

The fairest tax of all is one where ALL income is taxed at the same, progressive rates.

Everyone is taxed the same under this plan, and nobody can claim that there is any favoritism. If you have income that is high enough to be taxed at an unusually high rate, get on your knees and thank God/your higher power that you are more fortunate than all those other people.

[urbanrealtor]

[quote=CA renter]The fairest tax of all is one where ALL income is taxed at the same, progressive rates.

Everyone is taxed the same under this plan, and nobody can claim that there is any favoritism. If you have income that is high enough to be taxed at an unusually high rate, get on your knees and thank God/your higher power that you are more fortunate than all those other people.[/quote]

That was originally to be one of the key provisions of Reagan’s tax reform.

I don’t think that selling stocks or houses or whatever should ever be taxed at a rate below what a McDonald’s worker pays.

Its just plain wrong.

[livinincali]

[quote=urbanrealtor][quote=CA renter]The fairest tax of all is one where ALL income is taxed at the same, progressive rates.

Everyone is taxed the same under this plan, and nobody can claim that there is any favoritism. If you have income that is high enough to be taxed at an unusually high rate, get on your knees and thank God/your higher power that you are more fortunate than all those other people.[/quote]

That was originally to be one of the key provisions of Reagan’s tax reform.

I don’t think that selling stocks or houses or whatever should ever be taxed at a rate below what a McDonald’s worker pays.

Its just plain wrong.[/quote]

Technically it’s not. Capital Gains is either 15 or 20%. A McDonalds worker is going to fall into the 10% tax bracket and after deductions won’t pay any federal tax.

The problem with tax policy is it’s used heavily to create social engineering. Capital Gains tax was designed to encourage productive investments which would be good for the economy unfortunately it encourages short term speculation just as much as productive investment. We encourage people to buy houses, to have children, to hand money to wall street 401K money managers, ant the real question is want to do we really get out of that. Does it even work to produce the expected result?

I think a simpler tax code would be great. I prefer a consumption based tax but a simple progressive tax on income without deductions would also work. Government isn’t free so everybody should have to pay something and I prefer that something to be obvious. I also want to see a balanced budget because money printing deficit spending is really just a hidden tax. The lose of purchasing power through currency debasement is really no different than an outright tax. I want people to see what it actually costs to fund various entitlements and spending. That’s the only way to figure out what’s really important.

[dumbrenter]

[quote=zach347] Lets keep the capital gains tax at 15 % to a certain amount, lets say 500K annual, and all income above that is taxed normally.[/quote]

Did you mean only long term capital gains tax or all capital gains tax?

[SK in CV]

[quote=livinincali]The problem with tax policy is it’s used heavily to create social engineering. Capital Gains tax was designed to encourage productive investments which would be good for the economy unfortunately it encourages short term speculation just as much as productive investment. We encourage people to buy houses, to have children, to hand money to wall street 401K money managers, ant the real question is want to do we really get out of that. Does it even work to produce the expected result?

[/quote]

The evidence says no, it does not work to produce the expected results, particularly with regards to lower income tax on some kinds of investment income. Despite the fact that it has almost become dogma within some cirlces, that capital gains preferences is a good thing, there is no significant correlations with greater investment, savings, productivity, or income growth. Much like the argument that lower tax rates lead to higher tax revenue. There is simply no evidence it works.

[CA renter]

[quote=urbanrealtor][quote=CA renter]The fairest tax of all is one where ALL income is taxed at the same, progressive rates.

Everyone is taxed the same under this plan, and nobody can claim that there is any favoritism. If you have income that is high enough to be taxed at an unusually high rate, get on your knees and thank God/your higher power that you are more fortunate than all those other people.[/quote]

That was originally to be one of the key provisions of Reagan’s tax reform.

I don’t think that selling stocks or houses or whatever should ever be taxed at a rate below what a McDonald’s worker pays.

Its just plain wrong.[/quote]

Could not agree more, UR.

[Author]

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