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income from dividends or when your money sits in the bank earning interest is not capital gain. capital gain is when you buy shares, real-estate etc and market
by lubos 16y ago
income from dividends or when your money sits in the bank earning interest is not capital gain. capital gain is when you buy shares, real-estate etc and market price of these assets increases while they are on your balance sheet. then it's unrealized capital gain and you don't pay any tax on it until you sell it and make it realized capital gain. for simplicity reasons to explain my point, I didn't want to overcomplicate it with capital gains and losses.
- gnaritas 16y agoYes, but dividends are basically taxed at the same rate or slightly higher 20% as capital gains; they aren't taxed as earned income using the progressive bracket system. So while they aren't technically capital gains, my point stands.
- lubos 16y agoIn 1994 when Bill Gates started his private foundation, income from dividends was taxed like regular income. You're right it's 15% right now but don't forget there is new tax law coming into effect pretty much in two weeks that will tax dividends again like regular income.
- gnaritas 16y agoI wasn't aware the new law did that, but I'm pleased to hear it. Now if only they'd do the same with capital gains.