5 ms·
My wealth was $x one year. And $x + $y the following year. If I work my ass off doing manual labor, $y gets taxed more than if I merely own equity that got me
by VikingCoder 3y ago
My wealth was $x one year. And $x + $y the following year.
If I work my ass off doing manual labor, $y gets taxed more than if I merely own equity that got me the same amount.
And people wonder why the middle class is dying.
- jandrewrogers 3y agoIn the US, the tax code is such that you pay taxes on capital when you've lost capital too, not just on the gains. This doesn't happen with normal wage income hence why it is treated differently. The lower tax rates on capital reflect the reality that you are paying taxes on the losses too. Tax rates ideally should be flat for all sources of income net of risk, loss, and inflation. To achieve this you either allow deductions for these, which are limited or non-existent in the US, or you lower the tax rates to offset the fact that you can't deduct these.
- deleted 3y ago[deleted]
- Cicero22 3y agoI haven't heard that you're taxed when you lose money. My understanding was that If I invest $10,000 in a taxable account, lose $1,000, and withdraw the remaining $9,000, I won't pay taxes on the $9,0000 (ignoring transaction fees).
- antisthenes 3y ago> The lower tax rates on capital reflect the reality that you are paying taxes on the losses too No, you don't. You actually get a tax credit (e.g. you pay LESS taxes), if you incur certain types of capital losses.
- jandrewrogers 3y agoThe tax reduction against income for capital losses rounds to zero for all practical purposes. Long-term inflation losses are not deductible at all in the US even though they can often exceed notional returns.
- antisthenes 3y agoThat's not what your original comment said at all. You still haven't pointed out which capital losses get you taxed more. If you were referring to inflation, then why not just say that directly?