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"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 com
by 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 agoIf there was no capital gains tax it would almost certainly reduce investment in risky industries. For example, high tech.
- matt4077 9y agoThe 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 agoIt is recognized to some extent. Thats why interest has a different taxation rate than capital gains on stock investments.