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I don't see it that way. When you invest you risk the capital. You might get a return, you might not and therefore the taxation rules should reflect that. The s

I don't see it that way. When you invest you risk the capital. You might get a return, you might not and therefore the taxation rules should reflect that. The situation as a worker is different. The only risk you take is that you might select a bad company.

ashark 9y ago
> You might get a return, you might not and therefore the taxation rules should reflect that. So... you take a loss on your taxes, probably spreading it out in some way so you don't pay taxes for a few years, if it's a serious enough loss. Right? Why does the rate need to be different?
- fooster 9y ago
  Probably spreading it out in some way? You must also have a have a future gain to offset that loss. The rate difference is to compensate for the risk that you are taking by investing the money. Again, as a worker you have essentially no risk of capital (only of effort). Furthermore, I think you are misunderstanding the double taxation argument. The double taxation arises because the company has already payed tax on their profits.
etwigg 9y ago
"The only risk you take is that you might select a bad company." - that's the same risk an investor takes no? Except the investor can diversify across many companies, while the employee can rely on only one. Yours seems like an argument for investors to pay a higher rate than an employee, because they can diversify their risk. Personally, I don't think taxes should be based on risk assessment.
- fooster 9y ago
  If there was no capital gains tax it would almost certainly reduce investment in risky industries. For example, high tech.
  - matt4077 9y ago
    The risks should be reflected in the possible return from the investment (pre-tax), and it is. This is most obvious with fixed-income investments (bonds) where the rate is directly derived from the perceived risks. The justification also breaks down when you recognise that capital gains taxes are the same for investments in any sector: If it's supposed to reward risk-taking, why tax investments in retail or insurance stocks the same as early-stage venture capital?
    - fooster 9y ago
      It is recognized to some extent. Thats why interest has a different taxation rate than capital gains on stock investments.
maxxxxx 9y ago
Selecting a bad company is a pretty big risk. It may do a lot of damage to your career from which you potentially never can come back. The opportunity cost is pretty high. I don't believe capitalists take more risk or should get preferential tax treatment.
- vasilipupkin 9y ago
  it's not just capitalists who get a lower tax on investment income - it's everyone.
  - maxxxxx 9y ago
    It's a little skewed towards wealthier people, don't you think?
    - vasilipupkin 9y ago
      Think of it this way. If taxes on investment income are raised, those who aren't wealthy will have an even harder time catching up to those who are
      - maxxxxx 9y ago
        I don't think that's accurate. As of now the wealthy are pulling away quickly. This will continue if the majority of of workers' income (salary) is taxed higher than the income of investors.
        vasilipupkin 9y ago
        yes, but those workers will at some point retire and live off their investment income, no?
        maxxxxx 9y ago
        And they would have had much more money to invest if their income tax had been lower. You don't seem to want to understand my point: Low taxes for investment benefits wealthy people disproportionately. Yes, lower income also get some benefit but the vast majority goes to the wealthy. Same for all the Republic "tax reform" proposals: A little tax cut for small incomes, large tax cut for high incomes.
deleted 9y ago
[deleted]
jandrese 9y ago
Well, what else are you going to do with that capital? Stuff it in a mattress? The Government really doesn't need to encourage people with money to use it to make more money, that happens naturally. You might argue that they'll just "waste" it on goods and services, but that's what keeps the economy moving so it's not really a waste.

ashark 9y ago

> You might get a return, you might not and therefore the taxation rules should reflect that. So... you take a loss on your taxes, probably spreading it out in some way so you don't pay taxes for a few years, if it's a serious enough loss. Right? Why does the rate need to be different?

fooster 9y ago
Probably spreading it out in some way? You must also have a have a future gain to offset that loss. The rate difference is to compensate for the risk that you are taking by investing the money. Again, as a worker you have essentially no risk of capital (only of effort). Furthermore, I think you are misunderstanding the double taxation argument. The double taxation arises because the company has already payed tax on their profits.

etwigg 9y ago

"The only risk you take is that you might select a bad company." - that's the same risk an investor takes no? Except the investor can diversify across many companies, while the employee can rely on only one. Yours seems like an argument for investors to pay a higher rate than an employee, because they can diversify their risk. Personally, I don't think taxes should be based on risk assessment.

fooster 9y ago
If there was no capital gains tax it would almost certainly reduce investment in risky industries. For example, high tech.
- matt4077 9y ago
  The risks should be reflected in the possible return from the investment (pre-tax), and it is. This is most obvious with fixed-income investments (bonds) where the rate is directly derived from the perceived risks. The justification also breaks down when you recognise that capital gains taxes are the same for investments in any sector: If it's supposed to reward risk-taking, why tax investments in retail or insurance stocks the same as early-stage venture capital?
  - fooster 9y ago
    It is recognized to some extent. Thats why interest has a different taxation rate than capital gains on stock investments.

maxxxxx 9y ago

Selecting a bad company is a pretty big risk. It may do a lot of damage to your career from which you potentially never can come back. The opportunity cost is pretty high. I don't believe capitalists take more risk or should get preferential tax treatment.

vasilipupkin 9y ago
it's not just capitalists who get a lower tax on investment income - it's everyone.
- maxxxxx 9y ago
  It's a little skewed towards wealthier people, don't you think?
  - vasilipupkin 9y ago
    Think of it this way. If taxes on investment income are raised, those who aren't wealthy will have an even harder time catching up to those who are
    - maxxxxx 9y ago
      I don't think that's accurate. As of now the wealthy are pulling away quickly. This will continue if the majority of of workers' income (salary) is taxed higher than the income of investors.
      - vasilipupkin 9y ago
        yes, but those workers will at some point retire and live off their investment income, no?
        maxxxxx 9y ago
        And they would have had much more money to invest if their income tax had been lower. You don't seem to want to understand my point: Low taxes for investment benefits wealthy people disproportionately. Yes, lower income also get some benefit but the vast majority goes to the wealthy. Same for all the Republic "tax reform" proposals: A little tax cut for small incomes, large tax cut for high incomes.

deleted 9y ago

[deleted]

jandrese 9y ago

Well, what else are you going to do with that capital? Stuff it in a mattress? The Government really doesn't need to encourage people with money to use it to make more money, that happens naturally. You might argue that they'll just "waste" it on goods and services, but that's what keeps the economy moving so it's not really a waste.