3 ms·

Capital gains should be taxed as normal income.

briandear 8y ago
“The tax on capital gains directly affects investment decisions, the mobility and flow risk of capital.. the ease and difficulty experienced by new ventures in obtaining capital, and thereby the strength and potential for growth in the economy.” — President John F. Kennedy, 1963 Myopic egalitarianism on taxes would have ruinous affects on all levels of society. The incentive structures that determine how we allocate capital determine how dynamic our economy is and thus the opportunities for working and middle-class Americans. Lower capital gains taxes encourages skilled investors to reallocate capital to promising projects, ensuring capital goes to the companies most likely to create jobs as they innovate and scale. Better investment of capital literally results in higher wages, superior goods, and a more sustainable tax base. The maximum capital gains tax in the US is already one of the highest in the developed world. It should be zero, like Singapore, Hong Kong, and a dozen other OECD countries. Taxing capital gains as ordinary income would freeze long term investments in place. This is the “lock-in effect.” When capital gains taxes are high, the tax penalty discourages investors from moving their money to potentially better investments. Obama said raising capital gains taxes was “fair.” However, that sounds good to voters that don’t know any better while it would be disastrous in practice. His statement was catnip to the economically ignorant just like “build the wall” is catnip to the right-wing. Both ideas are of questionable benefit while the potential for unintended consequences are somewhat infinite. Of course there are those that actually want the US economy to get worse in order to bolster anti-capitalist arguments. So perhaps the negative effects of taxing capital gains as ordinary income is a desirable outcome for those who suggest it. A bit cynical, however, how else could it be explained: if raising capital gains taxes is bad for the economy as Kennedy and economists say, why would anyone support it? They’re either badly informed or perfectly informed and malicious.
- anth_anm 8y ago
  It irks me that you're allowed to effectively call me stupid but any response would get me in trouble. Appealing to the authority of rich white dudes on this topic is not at all convincing.
  - komali2 8y ago
    Well, that's a fair response, but it also is unconvincing - the op shouldn't have implied that you're malicious in wanting a tax on capital gains. Still, the question remains - does it have a chilling effect on investment? Since you seem to know about this I'm curious what your retort would be.
  - deleted 8y ago
    [deleted]
- smileysteve 8y ago
  Removing the corporate income tax implies changing the capital gains exemptions as corporations would no longer be double taxed. Once double taxation is eliminated, capital gains can approach the full progressive rate as they will still be incentivized without the earned income payroll taxes.
  - Sohcahtoa82 8y ago
    What double-taxation are you referring to here?
    - onlyrealcuzzo 8y ago
      Corporate tax + capital gains tax.
      - Sohcahtoa82 8y ago
        Still not sure what you're referring to. Are you talking about companies investing into other companies, then when they sell those investments, are they paying a capital gains AND corporate tax on the profits?
deleted 8y ago
[deleted]

“The tax on capital gains directly affects investment decisions, the mobility and flow risk of capital.. the ease and difficulty experienced by new ventures in obtaining capital, and thereby the strength and potential for growth in the economy.” — President John F. Kennedy, 1963 Myopic egalitarianism on taxes would have ruinous affects on all levels of society. The incentive structures that determine how we allocate capital determine how dynamic our economy is and thus the opportunities for working and middle-class Americans. Lower capital gains taxes encourages skilled investors to reallocate capital to promising projects, ensuring capital goes to the companies most likely to create jobs as they innovate and scale. Better investment of capital literally results in higher wages, superior goods, and a more sustainable tax base. The maximum capital gains tax in the US is already one of the highest in the developed world. It should be zero, like Singapore, Hong Kong, and a dozen other OECD countries. Taxing capital gains as ordinary income would freeze long term investments in place. This is the “lock-in effect.” When capital gains taxes are high, the tax penalty discourages investors from moving their money to potentially better investments. Obama said raising capital gains taxes was “fair.” However, that sounds good to voters that don’t know any better while it would be disastrous in practice. His statement was catnip to the economically ignorant just like “build the wall” is catnip to the right-wing. Both ideas are of questionable benefit while the potential for unintended consequences are somewhat infinite. Of course there are those that actually want the US economy to get worse in order to bolster anti-capitalist arguments. So perhaps the negative effects of taxing capital gains as ordinary income is a desirable outcome for those who suggest it. A bit cynical, however, how else could it be explained: if raising capital gains taxes is bad for the economy as Kennedy and economists say, why would anyone support it? They’re either badly informed or perfectly informed and malicious.

anth_anm 8y ago
It irks me that you're allowed to effectively call me stupid but any response would get me in trouble. Appealing to the authority of rich white dudes on this topic is not at all convincing.
- komali2 8y ago
  Well, that's a fair response, but it also is unconvincing - the op shouldn't have implied that you're malicious in wanting a tax on capital gains. Still, the question remains - does it have a chilling effect on investment? Since you seem to know about this I'm curious what your retort would be.
- deleted 8y ago
  [deleted]
smileysteve 8y ago
Removing the corporate income tax implies changing the capital gains exemptions as corporations would no longer be double taxed. Once double taxation is eliminated, capital gains can approach the full progressive rate as they will still be incentivized without the earned income payroll taxes.
- Sohcahtoa82 8y ago
  What double-taxation are you referring to here?
  - onlyrealcuzzo 8y ago
    Corporate tax + capital gains tax.
    - Sohcahtoa82 8y ago
      Still not sure what you're referring to. Are you talking about companies investing into other companies, then when they sell those investments, are they paying a capital gains AND corporate tax on the profits?

deleted 8y ago

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