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Honest question: isn't the growth of capital also an income? And if it is, it should get taxed, no?
by mangamadaiyan 10y ago
Honest question: isn't the growth of capital also an income? And if it is, it should get taxed, no?
- antisthenes 10y agoGrowth of capital is not an income, because it is subject to uncertainties in valuation and depreciation. Income is usually measured in a set amount of currency, and is generally perfectly liquid, while capital can sometimes only be valued if there's a buyer. So no, it is not also an income. This is one of the most common misconceptions here on HN (I often see wealth and income used interchangeably)
- a3camero 10y agoIt's usually taxed when its sold, rather than when the increase in value happens. More info: https://en.wikipedia.org/wiki/Capital_gains_tax https://en.wikipedia.org/wiki/Capital_gains_tax
- tomp 10y agoBesides the points raised by other two commenters, the difference is also that capital gains (i.e. income from liquidating capital) is often taxed at different (lower) rates than job income. I think that't patently absurd, but I guess our world works according to the "might is right" principle.