5 ms·

Did you mean to say taxing wealth or taxing capital gains? Taxing wealth (like real estate taxes) in essence means you never actually own anything, you’re just

by zaroth 8y ago

Did you mean to say taxing wealth or taxing capital gains? Taxing wealth (like real estate taxes) in essence means you never actually own anything, you’re just renting. Taxing capital gains means that everything you ever own will also be taken from you in the form of taxes on inflated dollars. The reason this website exists, and all the startups that have gone through YC, is because the tax on capital gains is low. Preferential tax treatment of capital gains from small business investment is the reason we have venture capital. The risk adjusted returns are far too low otherwise. Note that Section 1202 provides the first $10million in gains entirely tax-free right now. You can’t increase the tax rate and expect people to just make the same choices and end up with less to show for it. The more the government confiscates the upside, the less people will take the risk.

norswap 8y ago
> Taxing capital gains means that everything you ever own will also be taken from you in the form of taxes on inflated dollars. How? You're taxing gains so by definition, what you already own cannot be taken. > The reason this website exists, and all the startups that have gone through YC, is because the tax on capital gains is low. [evidence needed] > You can’t increase the tax rate and expect people to just make the same choices and end up with less to show for it. The more the government confiscates the upside, the less people will take the risk. Maybe, maybe not. The relationship between upside and risk is not purely linear. The human mind doesn't work like that. Rather it works in thresholds. Wealthy people can never make as much money by working than by investing. So they have to invest. If the return on all means of investment is similarly increased, the situation doesn't change.
- berberous 8y ago
  "> Taxing capital gains means that everything you ever own will also be taken from you in the form of taxes on inflated dollars. How? You're taxing gains so by definition, what you already own cannot be taken." His point is that you are taxing nominal gains, not real gains. Let's say you bought a house for $1mm in 2000, and sold it for approx. $1.5mm in 2017, owing $100k in capital gains (20% of the $500k nominal gain). You are now left with $1.4mm. But the inflation calculator I'm looking at says $1mm in 2000 dollars is $1.45mm in 2017 dollars, so even though the government claims they are taxing gains, the real value of your dollars has declined.
dragonwriter 8y ago
> Taxing capital gains means that everything you ever own will also be taken from you in the form of taxes on inflated dollars. No, it doesn't. Taxing long-term capital gains as normal income but inflation-correcting basis values so that you are taxing real, rather than nominal, gains is quite easily something that could be done. > The reason this website exists, and all the startups that have gone through YC, is because the tax on capital gains is low. Once you have surplus assets to immediate needs, investing them for returns is natural, preferential tax treatment may increase the propensity to do so somewhat, but it doesn't create it; mostly, it just rewards those who are rich enough that they would be investors in any case.

by zaroth 8y ago

norswap 8y ago

> Taxing capital gains means that everything you ever own will also be taken from you in the form of taxes on inflated dollars. How? You're taxing gains so by definition, what you already own cannot be taken. > The reason this website exists, and all the startups that have gone through YC, is because the tax on capital gains is low. [evidence needed] > You can’t increase the tax rate and expect people to just make the same choices and end up with less to show for it. The more the government confiscates the upside, the less people will take the risk. Maybe, maybe not. The relationship between upside and risk is not purely linear. The human mind doesn't work like that. Rather it works in thresholds. Wealthy people can never make as much money by working than by investing. So they have to invest. If the return on all means of investment is similarly increased, the situation doesn't change.

berberous 8y ago
"> Taxing capital gains means that everything you ever own will also be taken from you in the form of taxes on inflated dollars. How? You're taxing gains so by definition, what you already own cannot be taken." His point is that you are taxing nominal gains, not real gains. Let's say you bought a house for $1mm in 2000, and sold it for approx. $1.5mm in 2017, owing $100k in capital gains (20% of the $500k nominal gain). You are now left with $1.4mm. But the inflation calculator I'm looking at says $1mm in 2000 dollars is $1.45mm in 2017 dollars, so even though the government claims they are taxing gains, the real value of your dollars has declined.

dragonwriter 8y ago

> Taxing capital gains means that everything you ever own will also be taken from you in the form of taxes on inflated dollars. No, it doesn't. Taxing long-term capital gains as normal income but inflation-correcting basis values so that you are taxing real, rather than nominal, gains is quite easily something that could be done. > The reason this website exists, and all the startups that have gone through YC, is because the tax on capital gains is low. Once you have surplus assets to immediate needs, investing them for returns is natural, preferential tax treatment may increase the propensity to do so somewhat, but it doesn't create it; mostly, it just rewards those who are rich enough that they would be investors in any case.