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Russia Getting Rid of Capital Gains Tax
- chasingsparks 16y agoI'm curious, do many people here subscribe to Dan's blog? He was formerly my boss.
- rortian 16y agoNo, but I am curious, what is this guy like in person?
- chasingsparks 16y agoEqually sarcastic and condescending, but far more nuanced. It's a requirement of people who work for think tanks or politically motivated organizations -- on both sides of the isle -- to over-simplify. For people who study politics, economics, or whatever, it's infuriating. At the same time, you almost can't expect anything else; democracy is a game where you win when you have the most (marginal) voters. You enlist them easier through anger than rationality; Rationality requires work on behalf of voters.
- rortian 16y agoHaha, thanks for that. I'd like more about the person, but I appreciate the rational of his ridiculous tv persona.
- xenophanes 16y agoBreaking News!! Protests break out by people who sold investments yesterday!! (Just kidding. The value gain to existing investments from this new law will only cause a small immediate jump in prices, and the rest will ramp up gradually over the days before the change goes into effect.)
- stretchwithme 16y agowouldn't it make more sense, assuming they are trying to incentivize investment, for this change to apply to investments made after the change takes effect?
- cma 16y agoBig assumption. The motivations are probably more akin to the US's 1998 retroactive copyright term-length extension.
- mcritz 16y agoInteresting article. I guess the author wants America's economy to be as sound as Russia's?
- fgf 16y agoHigh taxes does not make an economy sound; a sound economy economy makes high taxes possible.
- endtime 16y agoNot sure this is hacker news, but if it is, could we skip the blogspam and link straight to the article (http://news.bbc.co.uk/2/hi/business/10349679.stm http://news.bbc.co.uk/2/hi/business/10349679.stm)? The blog post doesn't add any value.
- boucher 16y agoIt does embed that absolutely hilarious Cato Institute video.
- Quarrelsome 16y agoThat video was shockingly slanted. The guy presenting it was also very punchable-looking.
- Quarrelsome 16y agoEh, wha the video was not slanted? Did you guys watch it?!?
- boucher 16y agoI think there are just a lot of people who agree with the slant. Agree or not, though, it was obviously one sided.
- Quarrelsome 16y agoI don't mind people agreeing with the slant because it is a fair economic argument to make but to just mark me down for pointing out the slant is harsh IMO. That video was full of stuff complaining that you get taxed on EARNINGS from investments and trying to equate that to being taxed twice on the same principal sum. This is nonsense. You're being taxed for earnings and then earnings made from those earnings. That's two separate sums. The chap was trying to make out that people were being punished for saving as opposed to spending but failed to consider consumption taxes such as sales tax or VAT (in Europe). You don't get punished for saving, you place your money in the bank and it remains there, no punishment. You do get punished for earnings gained by those savings but that's to be expected because that is technically income.
- Ratufa 16y agoSince, as the blogger put it, "The former communists running Russia apparently understand tax policy better than the buffoons in charge of U.S. tax policy.", he must be in favor of the US having a VAT, like Russia does.
- petercooper 16y agoI'm not accusing you of this, but a common misconception I've seen from Americans is that VAT is "yet another tax." It's (usually) not. In California, I was paying 8.25% sales tax (and this can go up to 10.75% with some local sales taxes added) and in the UK I pay 17.5% but there are no sales taxes, and certainly not any "local" ones I need to be aware of. A can of coke that costs 60p in London costs 60p in Edinburgh too.
- gojomo 16y agoIn the US, it might wind up being 'yet another tax' -- because neither income nor sales taxes would necessarily go away with the imposition of a VAT.
- jerf 16y agoMost Americans who are A: informed enough to know about VATs and B: against their introduction here are concerned that it would be instituted as just another tax here. Resistance would be lessened if there was a credible promise to simplify the rest of the tax code (not eliminated, but lessened), but I don't know who has the moral authority to make such a promise right now, whereas I have a pretty clear idea who has the legal authority to institute a VAT. The motivation for it being discussed in the US is not for it to be a revenue-neutral modification to our tax code.
- yummyfajitas 16y agoAn additional problem with VAT is that it is mostly transparent to the people being taxed. If you raise my taxes with VAT, I'll notice prices of assorted goods going up slightly, be too lazy to add up the various cost increases. If you raise my income taxes, I'll immediately notice that I'm $2000 poorer than I was before, and maybe I'll vote for the other guy.
- RockyMcNuts 16y agoIf you invest in a kleptocracy, capital gains tax is the least of your worries. If you don't kowtow to the right people, murky authorities seize your business on trumped up tax charges, and anyone who fights dies mysteriously in jail. http://dealbook.blogs.nytimes.com/2009/11/18/hermitage-capital-lawyer-dies-in-russian-jail/?scp=1&sq=hermitage&st=cse http://dealbook.blogs.nytimes.com/2009/11/18/hermitage-capit...
- dennisgorelik 16y agoNo capital gain taxes is important for internal Russian businesses. It would boost Russian economy.
- garply 16y agoWelcome to how the majority of nations in the world operate.
- muhfuhkuh 16y agoSpurring investment in a country whose economy subsists almost solely on oil and coal controlled by former soviet Politburo officials and their hanger-on thugs, who then "nationalize" and otherwise stifle outside competition. Then they all hole up in their high-rise Onion domes in Moscow while the rest of the country fights for the scraps in an all-grey market economy. Sounds like a sound business plan to me. Where do I sign?
- rms 16y agoIt's not enough to get me to do business in a country lacking rule of law. While I respect the functioning of the Chinese economy, I also wouldn't start a business there for the same reason. Usually I am comfortable with risk, but shakedown by government under threat of extreme lack of liberty, torture, or death is a risk that really messes with my expected value calculations.
- fgf 16y agoIt's misleading to compare china to russia like this[1], commercial law in general (IP rights being an exception) is paid more respected in China than in Russia. As a businessman in the former you don't face the risk of "shakedown by government under threat of extreme lack of liberty, torture, or death" in Russia the risk to both your property (apart from IP) and personal safety is considerably larger (and less predictable). [1]http://books.google.com/books?id=YlKYLRjcoi0C&pg=PA39&dq=%22Rule+of+law+in+Asia%22&ei=hcIASqy4KKGeygSpzf2vDQ#v=onepage&q=%22Rule%20of%20law%20in%20Asia%22&f=false http://books.google.com/books?id=YlKYLRjcoi0C&pg=PA39...
- lsc 16y agonote, cutting capital gains only helps you when you sell (or when you are getting investment on the promise you will pump up the company and sell. for those of us who plan on holding, lowering capital gains does not help. i have to pay income tax on all my income, like any other working schlub.
- johnwatson11218 16y agoI want to repeat a point that I read in one of Jim Roger's books. He was in favor of repealing all capital gains taxes simply to allow individuals an option in the fight against inflation. The example is of a person who has enough cash for 100 cheeseburgers. They decide to put that money in something like gold. The government prints lots of money causing inflation and the nominal value of the gold is now much higher. If the investor sells the gold he still has enough money to buy 100 cheeseburgers. However the government will say that he has a net capital gain and must pay tax. Jim Roger's point was that without capital gains tax people could put their money into any form that they thought would preserve their wealth better than fiat currency. With capital gains we all become speculators trying to beat inflation and still realize a net profit after taxes.
- srgseg 16y agoCapital Gains Tax is also a form of triple taxation. If you invest in a company and make a capital gain of $100 million, the capital gain is valued at $100m because that's the expected increase in profit take of that company over its lifetime. That profit will be taxed once through corporation tax, and then a second time through dividends tax. Capital gains tax is a third tax on these profits.
- asdf333 16y agoslightly inaccurate. The dividends tax is the same as the capital gains tax in the sense that they are both applied only once at the shareholder level. so unless i have something wrong, its a double tax. not a triple tax. (corp tax + cap gains or corp tax + dividends)
- srgseg 16y agoYou're correct about (corp tax + cap gains or corp tax + dividends). What I'm pointing out is that this theoretical future $100m in value is being taxed once through capital gains tax for the person that created the value, then a second time via corporation tax when that value manifests itself as a profit, then a third time when someone tries to take that profit as a dividend. And possibly fourth when estate tax is paid. That's a lot of tax.