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The problem with treating investment profits as regular income is that you can have negative investment profit but you can never have negative income. If I make

by pat2man 11y ago

The problem with treating investment profits as regular income is that you can have negative investment profit but you can never have negative income. If I make 100k one year on my investments and loose 100k the next year I effectively paid taxes without making any money.

lyncnshare 11y ago
You can have net operating loss carry-forwards that offset profits for tax purposes in future years. You can have capital losses that can offset capital gains and some ordinary income at the investor level. So no, you didn't pay taxes on the losses.
mattmanser 11y ago
Yes you can. Do people not eat when they've not got a job? If you're unemployed you have a 'loss', because you have expenditures. Also, there's an additional hidden loss. I earn $30k last year, with a tax break of $3k, this year I earn nothing because I take the year off to have a baby, I lost $3k in tax break. When I work next year I don't get a $6k tax break. I can't ever make that back. Just because it's hidden, doesn't mean it's not there. And that's far more expensive than it is to someone taking extreme risks with capital that they can lose/earn $100k in a year. Also, you already tax your gamblers in the US...
- tostitos1979 11y ago
  Aren't net winnings are taxed for gamblers? I'm usually calling out for a progressive tax system, however, the parent is right. Investment doesn't work the way you describe. You are asking people to risk capital in order to gain some reward. A particular investment may not pan out for years and then give a windfall. I'm going to go out on a limb and say this: typically, the longer term payoff kind of things benefit society more. As someone who has very little capital, I too get unhappy when I see regressive tax regimes. The increase in inequality is one of the great problems of our age. That said, we must take care not to throw out the baby with the bathwater. Our current standard of living would not be possible without investment. Your example about taking time off for the baby is an interesting one. Perhaps the tax system needs to take account of people taking sabbaticals and such.

by pat2man 11y ago

lyncnshare 11y ago

You can have net operating loss carry-forwards that offset profits for tax purposes in future years. You can have capital losses that can offset capital gains and some ordinary income at the investor level. So no, you didn't pay taxes on the losses.

mattmanser 11y ago

Yes you can. Do people not eat when they've not got a job? If you're unemployed you have a 'loss', because you have expenditures. Also, there's an additional hidden loss. I earn $30k last year, with a tax break of $3k, this year I earn nothing because I take the year off to have a baby, I lost $3k in tax break. When I work next year I don't get a $6k tax break. I can't ever make that back. Just because it's hidden, doesn't mean it's not there. And that's far more expensive than it is to someone taking extreme risks with capital that they can lose/earn $100k in a year. Also, you already tax your gamblers in the US...

tostitos1979 11y ago
Aren't net winnings are taxed for gamblers? I'm usually calling out for a progressive tax system, however, the parent is right. Investment doesn't work the way you describe. You are asking people to risk capital in order to gain some reward. A particular investment may not pan out for years and then give a windfall. I'm going to go out on a limb and say this: typically, the longer term payoff kind of things benefit society more. As someone who has very little capital, I too get unhappy when I see regressive tax regimes. The increase in inequality is one of the great problems of our age. That said, we must take care not to throw out the baby with the bathwater. Our current standard of living would not be possible without investment. Your example about taking time off for the baby is an interesting one. Perhaps the tax system needs to take account of people taking sabbaticals and such.