5 ms·

Seems like there should be a better solution to this specific problem than lowering the marginal rates.

by Goladus 15y ago

WalterBright 15y ago
The general principle is that taxing A will cause there to be less of A, and subsidizing B will cause there to be more of B. Why not harness this principle? What do we want less of? Can we agree that we all want less pollution? How about putting a tax on pollution?
- wtvanhest 15y ago
  2 points on this: 1) Reagan lowered capital gains and put up barriers for tax shelters at the same time. Because it occurred at the same time there is no way to decouple whether lowering the marginal tax rate or creating barriers for tax shelters caused money to flow from tax shelters. (most likely there is an academic paper out there on this, but I do not have one) 2) Increasing the tax rate may cause people to stay in some securities sometimes, but for the vast majority of institutional investors this increase in tax rate will have no effect on decision making since the majority of investors in these funds are 401K investments that are not taxable. For the taxable investors, this becomes an issue, but the vast majority of funds still have a lot of churn which indicates that your formula doesn't matter. http://www.smartmoney.com/invest/strategies/the-taxing-side-of-mutual-funds-17616/ http://www.smartmoney.com/invest/strategies/the-taxing-side-...
  - WalterBright 15y ago
    There's not much point in having a tax on capital gains at all if an insignificant number of investors would have taxable capital gains.
    - wtvanhest 15y ago
      The tax increase is not targeted as much at standard fundamental equity or even scientific equity as much as it is targeted at VC, other non-VC PE and probably the largest segment Real Estate. I'm not endorsing the tax increase, rather I am stating that the approach you used to say it shouldn't exist really isn't proven by the market. In my opinion, the best reason to oppose the tax increase would be to say that it may temporarily decrease real estate transaction volumes and may permanently decrease RE churn which will reduce a lot of income for fee based services like RE brokerage, bankers, title companies etc. Further putting pressure on an already depressed job market.

Seems like there should be a better solution to this specific problem than lowering the marginal rates.

by Goladus 15y ago

Seems like there should be a better solution to this specific problem than lowering the marginal rates.

The general principle is that taxing A will cause there to be less of A, and subsidizing B will cause there to be more of B. Why not harness this principle? What do we want less of? Can we agree that we all want less pollution? How about putting a tax on pollution?

wtvanhest 15y ago
2 points on this: 1) Reagan lowered capital gains and put up barriers for tax shelters at the same time. Because it occurred at the same time there is no way to decouple whether lowering the marginal tax rate or creating barriers for tax shelters caused money to flow from tax shelters. (most likely there is an academic paper out there on this, but I do not have one) 2) Increasing the tax rate may cause people to stay in some securities sometimes, but for the vast majority of institutional investors this increase in tax rate will have no effect on decision making since the majority of investors in these funds are 401K investments that are not taxable. For the taxable investors, this becomes an issue, but the vast majority of funds still have a lot of churn which indicates that your formula doesn't matter. http://www.smartmoney.com/invest/strategies/the-taxing-side-of-mutual-funds-17616/ http://www.smartmoney.com/invest/strategies/the-taxing-side-...
- WalterBright 15y ago
  There's not much point in having a tax on capital gains at all if an insignificant number of investors would have taxable capital gains.
  - wtvanhest 15y ago
    The tax increase is not targeted as much at standard fundamental equity or even scientific equity as much as it is targeted at VC, other non-VC PE and probably the largest segment Real Estate. I'm not endorsing the tax increase, rather I am stating that the approach you used to say it shouldn't exist really isn't proven by the market. In my opinion, the best reason to oppose the tax increase would be to say that it may temporarily decrease real estate transaction volumes and may permanently decrease RE churn which will reduce a lot of income for fee based services like RE brokerage, bankers, title companies etc. Further putting pressure on an already depressed job market.