Proposal for capital gains taxes

[miketheidiot]

I'll start out with my general hypothesis: Wise, long term investment is driven by strong profits which are caused by strong demand for products and services. Low capital gains taxes only serve to increase the potential profits of speculation, and do little to add capital investment into the economy, and may actually hurt the economy by causing instability. This is certainly up for debate, however, regardless, i think we call all agree that long term investment is better than short tern investment when trying to develop stable, profitable businesses. Here is a proposal that i have developed after reading over other countries capital gains tax systems:

to begin with, the tax rate would be flat across all incomes, and the sale of primary residences would not be taxed.

This is the change. There would be two rates for capital gains, first, any assets owned for less than a year would be taxed at a rate of, say, 25%. However, after a year, the rate of taxation would only be 5-10%.

 

[synapsetx]

Umm.. are you familiar with capital gains taxes at all? There is already a short term and long term cap gains tax difference.

 

[Mxylplyx]

Originally posted by: synapsetx
Umm.. are you familiar with capital gains taxes at all? There is already a short term and long term cap gains tax difference.

/thread

 

[marincounty]

Politicians are always saying how much they value people's work, and yet tax labor at a higher rate than capital gains?
How about we tax labor LESS than capital gains?

 

[herm0016]

the money gets taxed twice, once when you make it and once when you take it out of the investment. you end up paying a lot more tax on money you invest already.

 

[spidey07]

lol, that's about how it is today. 15% on gains over a year (asset held longer than a year), short term is your normal rate (taxed as regular income).

The best solution is ZERO capital gains tax. It should never be taxed to begin with. That would spur more capital investment because there isn't the tax penalty.

 

[Genx87]

Hehe I dont want to pile on but we already have a system your propose. afaik short term is taxed at your personal income rate. Long term is 15%.

 

[Craig234]

Originally posted by: spidey07
The best solution is ZERO capital gains tax. It should never be taxed to begin with. That would spur more capital investment because there isn't the tax penalty.

Brilliant. You have determined that taxes cost money!

We should get rid of all sales taxes so people buy more. We should get rid of all income taxes so people are incented to work more. Get rid of all business taxes so companies can invest more. Get rid of gas taxes so people are incented to drive more. Jut get rid of all taxes, and things will work fine! Too bad the Nobel for Economics was already awarded.

 

[mugs]

Originally posted by: herm0016
the money gets taxed twice, once when you make it and once when you take it out of the investment. you end up paying a lot more tax on money you invest already.

No you don't. Your initial investment is not taxed again, only your gains are taxed.

 

[Genx87]

Originally posted by: Craig234

Originally posted by: spidey07
The best solution is ZERO capital gains tax. It should never be taxed to begin with. That would spur more capital investment because there isn't the tax penalty.

Brilliant. You have determined that taxes cost money!

We should get rid of all sales taxes so people buy more. We should get rid of all income taxes so people are incented to work more. Get rid of all business taxes so companies can invest more. Get rid of gas taxes so people are incented to drive more. Jut get rid of all taxes, and things will work fine! Too bad the Nobel for Economics was already awarded.

Drama queen party of one.

 

[Craig234]

Originally posted by: Genx87

Originally posted by: Craig234

Originally posted by: spidey07
The best solution is ZERO capital gains tax. It should never be taxed to begin with. That would spur more capital investment because there isn't the tax penalty.

Brilliant. You have determined that taxes cost money!

We should get rid of all sales taxes so people buy more. We should get rid of all income taxes so people are incented to work more. Get rid of all business taxes so companies can invest more. Get rid of gas taxes so people are incented to drive more. Jut get rid of all taxes, and things will work fine! Too bad the Nobel for Economics was already awarded.

Drama queen party of one.

Post count whore party of zero.

 

[BoberFett]

Originally posted by: mugs

Originally posted by: herm0016
the money gets taxed twice, once when you make it and once when you take it out of the investment. you end up paying a lot more tax on money you invest already.

No you don't. Your initial investment is not taxed again, only your gains are taxed.

Oh, so that's why it's called capital gains!!! *lightbulb*

LOL

 

[miketheidiot]

Originally posted by: spidey07
lol, that's about how it is today. 15% on gains over a year (asset held longer than a year), short term is your normal rate (taxed as regular income).

The best solution is ZERO capital gains tax. It should never be taxed to begin with. That would spur more capital investment because there isn't the tax penalty.

that would not spur capital investment, previous lowering of cap gains taxes hasn't led to an increase in investment either.


I'm not sure how that i didn't know that short term investments were taxed at income tax rates, i'm pretty baffled right now, and i'll factor this in under self pwnage

 

[miketheidiot]

Originally posted by: herm0016
the money gets taxed twice, once when you make it and once when you take it out of the investment. you end up paying a lot more tax on money you invest already.

 

[spidey07]

Originally posted by: miketheidiot

Originally posted by: spidey07
lol, that's about how it is today. 15% on gains over a year (asset held longer than a year), short term is your normal rate (taxed as regular income).

The best solution is ZERO capital gains tax. It should never be taxed to begin with. That would spur more capital investment because there isn't the tax penalty.

that would not not spur capital investment.


I'm not sure how that i didn't know that short term investments were taxed at income tax rates.

How could it not? You have 100,000 dollars to invest and a bunch of choices. One of those choices there is no tax on the gains, all others there are.

Which one would you choose?

Or how about dividend reinvestment plans where stock dividends are automatically used to purchase more of the same stock. Having zero tax on that = automatically more capital investment.

 

[Fern]

Originally posted by: miketheidiot

Originally posted by: spidey07
lol, that's about how it is today. 15% on gains over a year (asset held longer than a year), short term is your normal rate (taxed as regular income).

The best solution is ZERO capital gains tax. It should never be taxed to begin with. That would spur more capital investment because there isn't the tax penalty.

that would not spur capital investment, previous lowering of cap gains taxes hasn't led to an increase in investment either.


I'm not sure how that i didn't know that short term investments were taxed at income tax rates, i'm pretty baffled right now, and i'll factor this in under self pwnage

Lower taxes on cap gains makes it attractive for foreigners to invest here, that would increase captial.

Lower taxes on cap gains also makes for easier flow of captial. If you've lots of capital tied up in an investment but will get hammered by taxes if you liquidate to redeploy it, you're probably not gonna do it.

Fern

 

[Stunt]

Even though Mike wasn't fully familiar with capital gains taxation...he has a good point.

What about 0% for long term since the money was already taxed through income and like 50% for short term?

All these short term trades do not help with capital investment or economic stability.

 

[fskimospy]

Originally posted by: spidey07

Originally posted by: miketheidiot

Originally posted by: spidey07
lol, that's about how it is today. 15% on gains over a year (asset held longer than a year), short term is your normal rate (taxed as regular income).

The best solution is ZERO capital gains tax. It should never be taxed to begin with. That would spur more capital investment because there isn't the tax penalty.

that would not not spur capital investment.


I'm not sure how that i didn't know that short term investments were taxed at income tax rates.

How could it not? You have 100,000 dollars to invest and a bunch of choices. One of those choices there is no tax on the gains, all others there are.

Which one would you choose?

Or how about dividend reinvestment plans where stock dividends are automatically used to purchase more of the same stock. Having zero tax on that = automatically more capital investment.

That would depend on a whole load of different things. How likely is the company to be successful? In a country that has educated its population, has effective infrastructure, and well built institutions, thanks in part to the capital gains tax you are paying, a company is more likely to succeed. No tax on capital gains is pretty worthless if you never make any capital gains to tax. Do you think Microsoft could have become what it is based out of Mexico?

 

[spidey07]

50% short would be too steep. 10-15% would be agreeable to me as long as long term is kept at zero.

 

[Fern]

The reason we have different (higher) rates for ST cap gains sv LT cap gains is because of inflation.

LT cap gains are always overstated because of inflation, so - yes - in a sense part of your money is taxed twice (even though we subtract your basis from the proceeeds).

Inflation is a very negligiable aspect in ST gains.

Fern

 

[Gonad the Barbarian]

Can't we get rid of it altogether and just tax it as income?

 

[IronWing]

Simply treat capital gains like any other income. Tax it at the going rate for the particular tax bracket the taxpayer falls into. Quit subsidizing the present investor class at the expense of future taxpayers.

 

[daishi5]

Originally posted by: Gonad the Barbarian
Can't we get rid of it altogether and just tax it as income?

I think we should tax all income as income, you made money off it, tax it. The real problem with low long term tax rates is that for the people with a lot of money they technically could invest enough to live off of and pay a very low income tax because all their income comes from long term investments.

And just so we can clear this up:
Capital gains tax rates

 

[BigJelly]

Originally posted by: Gonad the Barbarian
Can't we get rid of it altogether and just tax it as income?

This just in...

The market just dropped 20-30% and foreign investment in America dried up completely.

Yeah great plan Gonad :roll:

Once Obama decides what he wants to do, the market will finally make up its mind. I believe he will increase capital gains but not as much as people think. The reason for this is two fold: he knows his capital gain tax plan will affect the market and he hasn't released his plan yet. Since he hasn't released his plan yet, I believe it will increasing the capital gains to 20% (the lowest figure he has stated). The market has partially factored in an increase in capital gains and part of the volitility is that they have no idea what it will be: 20%, 25%, or normal income tax (IE higher for EVERYONE). Obviously the higher he taxes capital gains, the more it will hurt investment and hence the stock market. If he was going to increase the capital gains the lowest he mentioned, the market would act positivly (obviously the market will be lower than if he didn't increase capital gains) and he doesn't want that while Bush is still in the White House. If he was going to increase the capital gains tax more than 20%, he would announce it now so the market would continue to tank while Bush is in office.

Just my 2 cents. I know I'll get flamed for this, but when Obama, finally, discloses what he plans on doing with the capital gains tax, I'll be vindicated.

 

[spidey07]

Tax revenues generally go up when capital gains taxes are reduced so raising them just doesn't make any sense at all. Obama at a MINIMUM wants to raise them 33%. I'm guessing he'll raise them closer to 66%.