4 ms·

We could get rid of capital gains tax and tax it as normal income. We could also get rid of like kind exchange. This money could be used to lower or eliminate i

We could get rid of capital gains tax and tax it as normal income. We could also get rid of like kind exchange. This money could be used to lower or eliminate income taxes for the poor. It is all about incentivizing how we want capital to be invested for the benefit of society. Today we've decided that shareholders are primary for public companies. The stock market is at all time highs but it comes with a cost.

hn_throwaway_99 6y ago
Yeah, when it comes to capital gains I always thought it made the most sense to tax it as normal income but to index the basis against inflation.
herpderperator 6y ago
In the US, investments held less than a year are taxed at normal income.
pkaye 6y ago
Isn't Biden proposing to do that for those who earn more than $1M. Not sure how likely that will pass though.
innagadadavida 6y ago
How about we abolish all taxes and just tax the total wealth? That will give people the incentive to work as opposed to making a quick buck and retiring.
- bluedevil2k 6y ago
  How many people are looking to make a quick buck and retire? The people who are billionaires are billionaires because they are super competitive and super hard workers. Gates, Bezos, Jobs - you think they worked 8 hours a day when they were growing their companies? No, those guys are driven to succeed and that doesn’t just go away when you make X dollars.
  - dredmorbius 6y ago
    They're also, often or always: - Incredibly lucky. - Benefitting by an initial position of advantage. Most often family or nation of origin, though gender, race, or religion also. "Winning the birth lottery". - Benefiting by externalities. - Exploiting monopoly advantage. - (Frequently) Lobbying for advantage. - (Frequently) Engaging in illegal activities. - (Frequently) Engaging in unethical or exploitive activities. There are numerous super-competitive hard workers who are not billionaires. Some were unlucky, some born in the wrong place or time, some burdened by consscience or ethics, some crushed by existing monopolies or entrenched interests.
    - bluedevil2k 6y ago
      I hate this argument. There are 20 billionaires in Africa, you’re saying they had an advantage of race and country of origin? 4 in Vietnam. 6 in Peru. 27 in Thailand. Your argument is another “blame the system / white men are evil” argument that just doesn’t hold up when put against facts.
      - hn_throwaway_99 6y ago
        > There are 20 billionaires in Africa, you’re saying they had an advantage of race and country of origin. You conveniently skipped over the part where the comment you're responding to said "family or nation of origin". If anything, more billionaires in 3rd world countries got their wealth through corruption and family connections. Take the top billionaires in Africa: 1. Aliko Dangote: see "Family and Personal Life" on his Wikipedia page, which includes "He is the great-grandson of Alhaji Alhassan Dantata, the richest West African at the time of his death in 1955." 2. Nassef Onsi Sawiris: His Wikipedia entry starts with "is an Egyptian billionaire businessman, the youngest of Onsi Sawiris' three sons". Onsi Sawiris was a billionaire. 3. Mike Adenuga is more self-made, but even then, "his mother, Omoba Juliana Oyindamola Adenuga, was a businesswoman of royal Ijebu descent." There are other more notorious examples from that list of billionaires, like Isabel dos Santos. I'm interested to see how you re-evaluate your argument "when put against facts".
- plutonic 6y ago
  There is the real issue of people holding onto illiquid assets which are difficult to monetize. E.g, the phrase "land rich, cash poor" comes to mind. Selling off small portions of land, or renting out a bedroom at a time, are difficult for logistical or regulatory reasons. Not that I disagree with your sentiment. Just, there are non-trivial problems w.r.t. taxing wealth, as opposed to taxing income (which is probably already being paid in fungible, liquid, dollar bills).
ghufran_syed 6y ago
So the gains would be taxed as normal income, does that mean that losses would be deductible?
- herpderperator 6y ago
  In the US, up to $3k in losses can be deducted per year, the rest carries over and is eligible to be deducted the following year at the same $3k cap and with the same carryover rule.
ljhsiung 6y ago
I think removing the capital gains tax is a horrible idea. Firstly, there are 2 types of capital gains. Short term gains are just taxed as normal income and long term gains are taxed from 0,15,20% depending on your bracket. The whole purpose of lower taxes for longer gains is to incentivize longer term investments, encouraging people to stay in the market longer since any "lesser gains" could be offset by the lower taxes, and also fostering a much healthier type of growth as opposed to a quarterly focus. If anything, I think short term gains should be taxed more. I think the current environment is quite unhealthy, with lots of speculation and people just getting a quick buck selling options on Tesla week to week.
- plutonic 6y ago
  The problem here is that when an "investor" "earns" a rate of return due to capital gains, we ought to recognize that these gains are not due to capital performing useful work (e.g., capital used to found a business) but are the result of speculation. Whether the speculation is long-term or short-term is immaterial. Because of this, aside from the company's IPO, stock market "investment" ought to be discouraged in favor of useful investment. Therefore I see no reason to tax capital gains at a rate lesser than that of income.

hn_throwaway_99 6y ago

Yeah, when it comes to capital gains I always thought it made the most sense to tax it as normal income but to index the basis against inflation.

herpderperator 6y ago

In the US, investments held less than a year are taxed at normal income.

pkaye 6y ago

Isn't Biden proposing to do that for those who earn more than $1M. Not sure how likely that will pass though.

innagadadavida 6y ago

How about we abolish all taxes and just tax the total wealth? That will give people the incentive to work as opposed to making a quick buck and retiring.

bluedevil2k 6y ago
How many people are looking to make a quick buck and retire? The people who are billionaires are billionaires because they are super competitive and super hard workers. Gates, Bezos, Jobs - you think they worked 8 hours a day when they were growing their companies? No, those guys are driven to succeed and that doesn’t just go away when you make X dollars.
- dredmorbius 6y ago
  They're also, often or always: - Incredibly lucky. - Benefitting by an initial position of advantage. Most often family or nation of origin, though gender, race, or religion also. "Winning the birth lottery". - Benefiting by externalities. - Exploiting monopoly advantage. - (Frequently) Lobbying for advantage. - (Frequently) Engaging in illegal activities. - (Frequently) Engaging in unethical or exploitive activities. There are numerous super-competitive hard workers who are not billionaires. Some were unlucky, some born in the wrong place or time, some burdened by consscience or ethics, some crushed by existing monopolies or entrenched interests.
  - bluedevil2k 6y ago
    I hate this argument. There are 20 billionaires in Africa, you’re saying they had an advantage of race and country of origin? 4 in Vietnam. 6 in Peru. 27 in Thailand. Your argument is another “blame the system / white men are evil” argument that just doesn’t hold up when put against facts.
    - hn_throwaway_99 6y ago
      > There are 20 billionaires in Africa, you’re saying they had an advantage of race and country of origin. You conveniently skipped over the part where the comment you're responding to said "family or nation of origin". If anything, more billionaires in 3rd world countries got their wealth through corruption and family connections. Take the top billionaires in Africa: 1. Aliko Dangote: see "Family and Personal Life" on his Wikipedia page, which includes "He is the great-grandson of Alhaji Alhassan Dantata, the richest West African at the time of his death in 1955." 2. Nassef Onsi Sawiris: His Wikipedia entry starts with "is an Egyptian billionaire businessman, the youngest of Onsi Sawiris' three sons". Onsi Sawiris was a billionaire. 3. Mike Adenuga is more self-made, but even then, "his mother, Omoba Juliana Oyindamola Adenuga, was a businesswoman of royal Ijebu descent." There are other more notorious examples from that list of billionaires, like Isabel dos Santos. I'm interested to see how you re-evaluate your argument "when put against facts".
plutonic 6y ago
There is the real issue of people holding onto illiquid assets which are difficult to monetize. E.g, the phrase "land rich, cash poor" comes to mind. Selling off small portions of land, or renting out a bedroom at a time, are difficult for logistical or regulatory reasons. Not that I disagree with your sentiment. Just, there are non-trivial problems w.r.t. taxing wealth, as opposed to taxing income (which is probably already being paid in fungible, liquid, dollar bills).

ghufran_syed 6y ago

So the gains would be taxed as normal income, does that mean that losses would be deductible?

herpderperator 6y ago
In the US, up to $3k in losses can be deducted per year, the rest carries over and is eligible to be deducted the following year at the same $3k cap and with the same carryover rule.

ljhsiung 6y ago

I think removing the capital gains tax is a horrible idea. Firstly, there are 2 types of capital gains. Short term gains are just taxed as normal income and long term gains are taxed from 0,15,20% depending on your bracket. The whole purpose of lower taxes for longer gains is to incentivize longer term investments, encouraging people to stay in the market longer since any "lesser gains" could be offset by the lower taxes, and also fostering a much healthier type of growth as opposed to a quarterly focus. If anything, I think short term gains should be taxed more. I think the current environment is quite unhealthy, with lots of speculation and people just getting a quick buck selling options on Tesla week to week.

plutonic 6y ago
The problem here is that when an "investor" "earns" a rate of return due to capital gains, we ought to recognize that these gains are not due to capital performing useful work (e.g., capital used to found a business) but are the result of speculation. Whether the speculation is long-term or short-term is immaterial. Because of this, aside from the company's IPO, stock market "investment" ought to be discouraged in favor of useful investment. Therefore I see no reason to tax capital gains at a rate lesser than that of income.