The capital gains tax discount is unjustified

[I'm Supposn]

Long term capital gains taxes are not an increased tax rate or an additional tax upon capital gains. It is a discounted tax rate upon profits due from the sale of something held by the seller for a year or more.

[We agree that investors consider detailed factors before they risk their wealth. We agree that investors are attracted by such attributes as greater profits and/or sooner realization of profits and/or lesser risks. Investors shun enterprises to the extent that (in their opinion) the prospects are contrary to these desirable attributes].

Preferential consideration for income earned by capital gains presumes that income is more economically worthy (than other incomes). I’m among those contending that the income derived from lump sum sales are not economically more (or less) beneficial than the nurturing of an enterprise for steady and hopefully increasing profits.

Tax preference for capital gain is government’s attempt to counteract normal open market behavior. The U.S. Congress has determined that Adam Smith’s “great invisible hand” is shaky and inferior to the opinion of campaign contributors.

I am not opposed to tax reduction but I abhor tax inequity. It is politically unfeasible to eliminate tax reduction for home sale’s capital gains. Revenue retained due to the elimination of all other capital gain tax reductions should be applied to reducing federal debt. (I doubt if there’s sufficient revenue to reduce tax rates for regular incomes).

Respectfully, Supposn

 

[phattonez]

Long term capital gains taxes are not an increased tax rate or an additional tax upon capital gains. It is a discounted tax rate upon profits due from the sale of something held by the seller for a year or more.

What? How is an additional tax not an additional tax?

 

[I'm Supposn]

What? How is an additional tax not an additional tax?

Phattonez, long term capital gains are a categorization of a particular source of income. It is not taxed at an increased rate but rather it is granted a lesser than the regular income tax rate. Thus I describe it as income not additionally taxed but rather taxed at a discounted rate.

I’m opposed to special strokes for special folks. I’m an advocate of free enterprise. Entrepreneurs should determine their investments by considering the open market’s rewards and penalties.

Respectfully, Supposn

 

[I'm Supposn]

Phattonez, I’m opposed to special strokes for special folks. I’m an advocate of free enterprise. Entrepreneurs should determine their investments by considering the open market’s rewards and penalties.

I have little patience with those who describe themselves as “conservatives” but seek special tax consideration for THEIR particular source of income. There’s a need for some tax consideration to be granted to lower income earners. That could have be better granted by simpler than progressive tax rate method.

For what was the best of intentions, progressive tax rates has been the underlying cause or justification for regulations that (similar to an onion) evolve with additional exceptions regulations growing over previous layers of exception regulations. This is the root cause of much of our income tax systems’ many inequities. Our income tax system continuously becomes less progressive and more regressive.

Stock indexes have often risen with no accompanying or future economic benefit for our nation. When the median wage increases (in “real” U.S. dollars), we all then experience economic benefits. When a real tide comes in it lifts all boats.

Respectfully, Supposn

 

[phattonez]

I'm not a conservative, but I'm just defending investment from the harsh treatment it's getting.

And yes, I agree with you about the income tax. It's too convoluted and we waste resources just trying to figure the thing out. We need a simpler tax. I'd like to see a flat sales tax. Income taxes, capital gains taxes, and corporate taxes should all be at 0 (including payroll taxes, social security, etc., get all the other ones to 0).

 

[imagep]

I'm not a conservative, but I'm just defending investment from the harsh treatment it's getting.

And yes, I agree with you about the income tax. It's too convoluted and we waste resources just trying to figure the thing out. We need a simpler tax. I'd like to see a flat sales tax. Income taxes, capital gains taxes, and corporate taxes should all be at 0 (including payroll taxes, social security, etc., get all the other ones to 0).

phat, I really dont think that investmentment is getting "harsh treatment". I have to agree with Supposn that currently profits on some investments (capital gains) are getting a "sweet deal" on taxes - and thus eleminating the "sweet deal" in no way is a new tax or harsh treatement - it is simply equalizing the taxes on varing types of income. Why should people who have profits on certain investments (which may or may not lead to economic growth) be given any type of special treatment? We should all be treated equally and all sources of income should be treated equally.

Assuming that there is a certain amount of money that the government needs to collect to operate, and regardless of the fact of whether or not the government wastes and over spends, giving a special deal to one income source requires over charging on other income sources. There are basically only two types of income sources:
1) earned income such as WORKING A REAL JOB, or running your own business
and
2) unearned income - that one makes by purchasing a security and then sitting back and hoping that the people run that particular company and who have to WORK for a living make a lot of money for the shareholder

So when we only tax unearned income (capital gains) at 15% rate, then we have to tax earned income at a higher rate (I believe the highest bracket is now up to 38% or so). It's a zero sum game. So the break on unearned income essentially robs from people who work to enrich people who make lots of money by not working.

Why in the world would we want to enrich the already rich at the expense of people who actually work a job and contribute to society?

Warren Buffet only pays 15% of his income in taxes because the vast majority of his income is from capital gains. Now how is this fair to a hard working business owner or doctor or lawyer or engineer or teacher when they have to pay a larger percent of their income in taxes than zillionairs like Warren Buffet or Bill Gates?

Thus, I am fairly supportive of a "flat tax" for all sources of income with a sizable base exemption so that people who have incomes within a "normal" range will pay little if anything in income taxes. If anyone claims that we need a "flat tax" and then says that we need to eleminate capital gains taxes they are a hypocrit (and their are plenty of people who support the elemination of capital gains and who also support a "flat tax").

In my fantasy world we would have just two income tax brackets - ZERO for people who have incomes within a normal range and maybe something possibly as much as 50% for every dollar of income above whatever we can agree is a normal income. Please note that this does not mean that people who have "normal" incomes won't contribute to our tax base - they would, in the form of a national sales tax plus whatever state taxes their particular state chooses to levee.

So what is a "normal income"? Doctors and lawyers tend to have the highest incomes out of all the typical jobs that Americans have. The average salary for attornies is only about $90k/year, for family doctors it is only about $120k per year, for doctor specialists (heart surgions, etc) it is about $400k. Even most top level attornies and even CEO's and executives at some fairly large companies make less than $400k per year. Also, only the top 1% of income earners have incomes anywhere near what most of us would consider as "rich" (the top 1% starts at about $400k/yr in income and the average income in the top 1% is about $1.5 million). Even most "rich" people live on less than $400k per year. There is a point where a "gazillionair" has all the personal houses that they are going to buy, all the fancy cars that they can drive, all the expensive furs and diamonds that they could ever wear - once they have aquired all that (even if it is excessive) they tend to significantly par down their living expenses - even if they can manage to spend a thousand dollars a day on fancy meals or first class plane tickets or super expensive resorts, or whatever they like to spend their money on, that still works out to less than $400k/year. Thus, $400k seems to be a fairly reasonable number for a personal income exemption. If one cant live the high life off of $400k/year, then you are just throwing away resouces anyway.


Now bear in mind that under this plan, even people who earn a few hundred thousand dollars a year OVER the exemption will still likely pay less in taxes than they do now because everyone would have the same tax exempt amount regardless of income.

 

[phattonez]

It's the demonization that I'm fighting. You act as though just because you invest and make money that it's not earned. The fact that you put up money as a risk means that it is earned. And it even ignores the fact that this money is very useful to the company for their expansion. More production is a good thing, right?

Besides, we can't just compare capital gains tax rate with an income tax rate because of the plethora of deductions that you can claim for your income tax.

 

[I'm Supposn]

It's the demonization that I'm fighting. You act as though just because you invest and make money that it's not earned. The fact that you put up money as a risk means that it is earned. And it even ignores the fact that this money is very useful to the company for their expansion. More production is a good thing, right?

Phattonez, I do not (as you wrote), “demonize” investment or investors.

Most of the profits that are granted the capital gains income tax discount are not due to “investment” as the word is more narrowly defined by economists.
Economists define a nation’s annual gross domestic product, (GDP) as the value of all goods and service products produced that year within the nation. “Investment” is included but “transfers of wealth” are excluded from the calculation of GDP.

Economists’ define “Investing” as the dedication of efforts and/or resources dedicated to (hopefully) produce additional goods and service products. Deposits into a bank, the purchase of stocks, bonds or real-estate do not in themselves produce additional new products. It is only when wealth is spent for goods and service products that are then “invested”. has any investment occurred.

I do not demonize speculators or financial profits themselves. The markets that promote the liquidity and enable trading the items of wealth are of economic benefit to the nation.

I’m opposed to our tax laws determination that some entrepreneurs’ decisions to sell their enterprises are of greater national benefit than others that dedicate their wealth and effort to improve their enterprises and possibly the leave more than wealth as a legacy. I’m opposed to government’s determining what sources of incomes are more preferred. I’m opposed to intervention of our markets to replace Adam Smith’s great clever invisible hand with government’s clumsy claw.

If you, (as I am) a proponent of free enterprise, you should also be opposed to government’s granting special strokes for special folks; you should be opposed to the unjustified capital gains tax discount.

Respectfully, Supposn

 

[phattonez]

Purchasing stocks and depositing money into a bank help provide new products. They provide the capital for more production.

Purchasing goods is not investment. Businesses don't expand on profits alone. Profits help investors know where investments should go, they are not the source of investment.

 

[imagep]

Phattonez, I do not (as you wrote), “demonize” investment or investors.

Most of the profits that are granted the capital gains income tax discount are not due to “investment” as the word is more narrowly defined by economists.
Economists define a nation’s annual gross domestic product, (GDP) as the value of all goods and service products produced that year within the nation. “Investment” is included but “transfers of wealth” are excluded from the calculation of GDP.

Economists’ define “Investing” as the dedication of efforts and/or resources dedicated to (hopefully) produce additional goods and service products. Deposits into a bank, the purchase of stocks, bonds or real-estate do not in themselves produce additional new products. It is only when wealth is spent for goods and service products that are then “invested”. has any investment occurred.

I do not demonize speculators or financial profits themselves. The markets that promote the liquidity and enable trading the items of wealth are of economic benefit to the nation.

I’m opposed to our tax laws determination that some entrepreneurs’ decisions to sell their enterprises are of greater national benefit than others that dedicate their wealth and effort to improve their enterprises and possibly the leave more than wealth as a legacy. I’m opposed to government’s determining what sources of incomes are more preferred. I’m opposed to intervention of our markets to replace Adam Smith’s great clever invisible hand with government’s clumsy claw.

If you, (as I am) a proponent of free enterprise, you should also be opposed to government’s granting special strokes for special folks; you should be opposed to the unjustified capital gains tax discount.

Respectfully, Supposn

EXCELLENT!

Your rock.

 

[I'm Supposn]

...... Besides, we can't just compare capital gains tax rate with an income tax rate because of the plethora of deductions that you can claim for your income tax.

Phattonez, I would have posted sooner but I first had to look up the definition of “plethora”.

People that avail themselves of the capital gains tax discount also generally take advantages of many other tax loop holes that are not available to wage earners. That itself isn;t reason to eliminate the capital gains tax discount but it’s certainly not a reason to retain it,

Respectfully, Supposn

 

[imagep]

Phattonez, I would have posted sooner but I first had to look up the definition of “plethora”.

People that avail themselves of the capital gains tax discount also generally take advantages of many other tax loop holes that are not available to wage earners. That itself isn;t reason to eliminate the capital gains tax discount but it’s certainly not a reason to retain it,

Respectfully, Supposn

With my "plan", capital gains would be taxed exactly like any other income source. Thus people with capital gains income would recieve the same benefits of any "tax loop holes" exactly the same as people with income from any other source.

It amazes me how people who support a "flat tax" often tend to want a flat tax on income derived from WORK but not on other sources of income - they want income derived from not working to be taxed at a lower rate.

This us unrelated but it also amazes me how many advocates of the "fair tax" are very much against any sort of welfare or redistributation of wealth, but they ignore the fact that the fair tax includes the largest proposed welfare program ever (the "prebate"). Fully one third of the tax collected from the fair tax would go to pay for the prebate. Everyone who makes below the poverty level would recieve more in prebate money than what they pay in fair tax - if that aint the evil redistributation of wealth I dont know what is.

It appears to me that the theories about economics and taxation that are most commonly subscribed to actually harm the majority of us. Liberals want to enrichen the poor at the expense of the middle class. Conservatives want to make it easier for the very rich to become even richer at the expense of the middle class. Either way, our middle class gets screwed, and our entire economy suffers for it.

Regardless, if someone has "extra" money they are going to invest it. It really does not matter if they pay no tax, 15% tax, or 50% tax, they are still going to invest it. Taxing profits made from investments does in no way reduce the incentive to invest - especially if the taxes from those investments is used to lower the tax on working. With a lower tax on working, the working class, who is also the consumer class, will either consume more or invest more or both - either way, it helps our economy.

Imagine if we actually taxed capital gains at the same rate we taxed work income. Then if some rich dude suggested that he shouldn't have to pay as high of a percentage of his income as middle class people do and suggested that he get to pay a reduced tax rate on his income. We would say that the rich dude thinks that he is better than us (and we would be correct). Most of us would be outraged.

Somehow his suggestion has actually came true. We have accepted this inequity to be OK because that is just the way it is and we cant do anything about it - or is it that the rich dude has actually convinced us that he is better than us and is entitled to paying a lower tax rate.

 

[HeresToThePoint]

Phattonez, I do not (as you wrote), “demonize” investment or investors.

Most of the profits that are granted the capital gains income tax discount are not due to “investment” as the word is more narrowly defined by economists.
Economists define a nation’s annual gross domestic product, (GDP) as the value of all goods and service products produced that year within the nation. “Investment” is included but “transfers of wealth” are excluded from the calculation of GDP.

Economists’ define “Investing” as the dedication of efforts and/or resources dedicated to (hopefully) produce additional goods and service products. Deposits into a bank, the purchase of stocks, bonds or real-estate do not in themselves produce additional new products. It is only when wealth is spent for goods and service products that are then “invested”. has any investment occurred.

I do not demonize speculators or financial profits themselves.

I disagree. The GDP calculation, although widely used, is not a valuable measurement of economic performance. For example, government spending in terms of value is a net loss investment; therefore is not economically productive. The spending is included in the GDP calculation, even though it qualifies as a transfer of wealth. This results in the government ramping up spending and saying, "look the GDP says its okay," but in reality we just committed more money in a bad investment. With respect to market investments, the initial investment is a wealth transfer, but the return on investment is the economic value created. These returns should receive preferential treatment because are beneficial to the economy. By advocating an increase capital gains taxes, you are deterring investment.

The markets that promote the liquidity and enable trading the items of wealth are of economic benefit to the nation.

I’m opposed to our tax laws determination that some entrepreneurs’ decisions to sell their enterprises are of greater national benefit than others that dedicate their wealth and effort to improve their enterprises and possibly the leave more than wealth as a legacy. I’m opposed to government’s determining what sources of incomes are more preferred. I’m opposed to intervention of our markets to replace Adam Smith’s great clever invisible hand with government’s clumsy claw.

I agree with the premise that there should be no difference between income from labor productivity and investment returns. But, long-term (low liquidity) capital investment is preferred over short-term investments (high liquidity). This is exemplified in higher bonds and CD interest rates, the longer the commitment. I think it is beneficial to encourage (by absence of taxation) long-term investments because it promotes stability. In the case of capital gains, the low taxation is consistent with the normal market forces.

Tax preference for capital gain is government’s attempt to counteract normal open market behavior. The U.S. Congress has determined that Adam Smith’s “great invisible hand” is shaky and inferior to the opinion of campaign contributors.

I am not opposed to tax reduction but I abhor tax inequity. It is politically unfeasible to eliminate tax reduction for home sale’s capital gains. Revenue retained due to the elimination of all other capital gain tax reductions should be applied to reducing federal debt. (I doubt if there’s sufficient revenue to reduce tax rates for regular incomes).

As for the debt problem, I'm opposed to providing new revenue to the government because history has shown that once taxes increase, the money is only "gifted" to the public on occasion. What a great PR spin! I'm going to steal 1/2 your sandwich, and your going to thank me for giving a 1/4 back. Instead, the answer is to streamline and consolidate existing required programs and eliminate unnecessary and failing programs, policies and legislation.

I agree, taxes on many occasions exist in opposition of normal open market behavior and the tax codes are horrendously complex. Instead would like to see lower income tax rates because it makes us inherently less productive. Similarly, an increase the capital gains tax is to further discourage good market behavior. Both negate market forces.

I disagree that the solution is to eliminate the capital gains discount; instead I think its more reasonable to say that the income tax is unjustified.
Respectfully, HTTP

On a side note: I want my sandwich...

 

[HeresToThePoint]

Somehow his suggestion has actually came true. We have accepted this inequity to be OK because that is just the way it is and we cant do anything about it - or is it that the rich dude has actually convinced us that he is better than us and is entitled to paying a lower tax rate.

A response, which I posted on another thread but addresses the fallacy:

The "rich people sitting around getting richer" chant that starts when we suggest eliminating the capital gains tax is a logical fallacy. The rich getting richer is a result, not a cause. The fact of the matter is: Smart people use money to create value in the securities market. Not so smart people (to be politically correct) waste money in the consumption market.

Smart decisions generate wealth and a lower tax rate makes that decision an even more profitable, being rich has nothing to do with making that decision.
Respectfully, HTTP

 

[Ikari]

What? How is an additional tax not an additional tax?

Income is income. My income gets taxed at a high rate, good or bad. But some people have been able to call their income something else (such as capital gains), and thus by doing so have decreased their tax obligation. It's essentially a perk to the rich, the aristocracy, who can be so widely invested that much of their income can be qualified as "capital gains". Everyone is equal, no one is special. You tax my income at X percent, then your income is taxed at X percent. The very very rich in this country end up paying less in taxes due to things like this. It's why Warren Buffett's tax rate is lower than his secretary's

 

[washunut]

Not sure what you understand about the cost of capital. People look at the after tax return when deciding to make a decision. So by increasing the capital gains tax you are again adding another anchor to the recovery of the U.S. economy. That is capital costs more so there is less investment leading to lower economic growth. This is compounded by the fact that the U.S. competes with the rest of the world for capital. So this would only serve to long term, exaserbate the problems for workers in the U.S. lowering tax rolls.

I know it feels good to " soak the rich". For example raising the top rate for highest earners would probably be less of a drag on the economy as raising the capital gains tax.

 

[TurtleDude]

Income is income. My income gets taxed at a high rate, good or bad. But some people have been able to call their income something else (such as capital gains), and thus by doing so have decreased their tax obligation. It's essentially a perk to the rich, the aristocracy, who can be so widely invested that much of their income can be qualified as "capital gains". Everyone is equal, no one is special. You tax my income at X percent, then your income is taxed at X percent. The very very rich in this country end up paying less in taxes due to things like this. It's why Warren Buffett's tax rate is lower than his secretary's

sounds like Envy to me

Buffett's rate is higher than his secretary's on his salary

he plays games to keep his salary artificially low so he pays less tax on it and then whines about how unfair that is

there should be no tax on income so that would stop this nonsense

you probably think people who work hard and save ought to have half their estate confiscated too because you won't have that sort of money when you die?

 

[I'm Supposn]

I agree with the premise that there should be no difference between income from labor productivity and investment returns. But, long-term (low liquidity) capital investment is preferred over short-term investments (high liquidity). This is exemplified in higher bonds and CD interest rates, the longer the commitment. I think it is beneficial to encourage (by absence of taxation) long-term investments because it promotes stability. In the case of capital gains, the low taxation is consistent with the normal market forces.Respectfully, HTTP

HTTP, concerning the capital gains tax discount, you began by stating “I agree with the premise that there should be no difference between income from labor productivity and investment returns. “. Then you follow with a “But” and arguments that are absolutely contradictory to your first sentence.

I’m not advocating that in spite of what’s unfeasible, our government fanatically cling to the “pure” ideology of individuals’ exercising their own judgments within a free enterprise system.

It is not unfeasible to eliminate the long term capital gains income tax discount. It is not unfeasible for the government not to interfere with entrepreneurs’ choices of selling their enterprises or nurturing them to further flower. The capital gains tax discount is government’s clumsy thumb tilting the scale.

When capital gains tax discounts are the determining factors to sell, then the aggregate net benefit of those sales to our nation’s economy is questionable. On the other hand if the capital gains tax discount was not the determining factor to sell, why are we granting a tax discount for what would have occurred with no loss of government revenue?

I understand conservatives that are opposed to government welfare except when those welfare benefits fall into their own hands.

Refer to the first message of this topic thread.
Respectfully, Supposn

 

[imagep]

A response, which I posted on another thread but addresses the fallacy:
Smart decisions generate wealth and a lower tax rate makes that decision an even more profitable, being rich has nothing to do with making that decision.
Respectfully, HTTP

OK, so do people who inherit lots of money (which is the #1 source of money that is invested in the stock market) make a smart decision by inheriting money? Or did they just get lucky when they choose their relatives?

 

[imagep]

income is income. My income gets taxed at a high rate, good or bad. But some people have been able to call their income something else (such as capital gains), and thus by doing so have decreased their tax obligation. It's essentially a perk to the rich, the aristocracy, who can be so widely invested that much of their income can be qualified as "capital gains". Everyone is equal, no one is special. You tax my income at x percent, then your income is taxed at x percent. The very very rich in this country end up paying less in taxes due to things like this. It's why warren buffett's tax rate is lower than his secretary's

exactly!!!

 

[I'm Supposn]

I disagree. The GDP calculation, although widely used, is not a valuable measurement of economic performance. For example, government spending in terms of value is a net loss investment; therefore is not economically productive. The spending is included in the GDP calculation, even though it qualifies as a transfer of wealth. This results in the government ramping up spending and saying, "look the GDP says its okay," but in reality we just committed more money in a bad investment.

With respect to market investments, the initial investment is a wealth transfer, but the return on investment is the economic value created. These returns should receive preferential treatment because are beneficial to the economy. By advocating an increase capital gains taxes, you are deterring investment.

Respectfully, HTTP

HTTP,
. we have so many balls in the air that I couldn’t recall where I read your GDP comments. I just posted my response on a thread entitled “GDP, median wage and standards of living”.

In response to your “With respect to market investments”; the initial investment is when goods and service products are purchased and dedicated to (hopefully) produce additional products. That's included and is why transfers of wealth are excluded from the calculation of GDP.

granting capital gains preferential tax treatment disciminatees against incomes of those who continue to invest and nurture their enterprises. They are denied similar preference. That’s certainly special strokes for special folks. Income should be recognized as income regardless of the source.

The capital gains tax discount, (i.e. government’s thumb on the scales), affects how businesses’ are conducted and that net affect is not to our economy’s best interest. You don’t trust the free enterprise system to make superior decisions?

Respectfully, Supposn

 

[imagep]

Not sure what you understand about the cost of capital. People look at the after tax return when deciding to make a decision. So by increasing the capital gains tax you are again adding another anchor to the recovery of the U.S. economy. That is capital costs more so there is less investment leading to lower economic growth. This is compounded by the fact that the U.S. competes with the rest of the world for capital. So this would only serve to long term, exaserbate the problems for workers in the U.S. lowering tax rolls.

I understand your arguement, but it is based on the assumption that our economy is driven my capital and not by consumer demand. I believe that arguement is invalid and here's why:

I own a business. Due to low demand (caused by the recession) for my products, my sales have declined very significantly. I don't have a need for more capital. If someone was to offer to lend me money with the stipulation that I had to expand my business, I would turn the offer down. I dont have the need to expand because I already have excess production capability. Businesses only expand when they have a need for expansion, and the need is created by demand for products.

Now let's say that business was booming, I would have lots of sales and I would be making lots of money. I would take a portion of my profits and use it to expand my business. I may borrow some of that money, but regardless, it would be the demand for my products that resulted in the expansion and possible borrowing.

It's not the availablility of capital that creates expansion or jobs. It's demand for products.

Exactly how many businesses are needing to borrow money to expand their businesses right now in this recession? Just about zero. So lets say that eleminated taxes on investments totally right now and that somehow inexplicably that caused new money flood into the capital market. Would that additional capital cause any businesses to expand? Absolutley not. Business will not expand until consumers start spending more.

Which came first - the chicken or the egg? I dont know to much about chickens and eggs, but I do know that demand for products ALWAYS comes before business expansion.

Eleminating or reducing taxes on investments will do absolutly nothing to help our economy. However reducing taxes that the consumer class pays (income taxes) will put money into the hands of the consumer who will then consume more products which will create demand which will result in expansion.

 

[HeresToThePoint]

HTTP, concerning the capital gains tax discount, you began by stating “I agree with the premise that there should be no difference between income from labor productivity and investment returns. “. Then you follow with a “But” and arguments that are absolutely contradictory to your first sentence.

I can agree with a premise, but disagree with the conclusion. I was merely pointing out the fact that there are benefits a long-term investments that is worthy of consideration. Its not contradictory to agree with a premise and disagree with a conclusion, that's just dividing the argument.

When capital gains tax discounts are the determining factors to sell, then the aggregate net benefit of those sales to our nation’s economy is questionable. On the other hand if the capital gains tax discount was not the determining factor to sell, why are we granting a tax discount for what would have occurred with no loss of government revenue?

By making long-term capital gains more profitable, it clearly motivates people to make long term investments which provide a pool of stable funds. While the net benefit to the economy is not questionable, but the social impact of such a policy is.

It is not unfeasible to eliminate the long term capital gains income tax discount. It is not unfeasible for the government not to interfere with entrepreneurs’ choices of selling their enterprises or nurturing them to further flower. The capital gains tax discount is government’s clumsy thumb tilting the scale.

Double and triple negatives confuse me, but I'll assume that you are saying it would be feasible to eliminate the long-term capital gains discount and government intervention in the market (correct me if I'm wrong). Yes, the capital gains tax is clumsy but so is the income tax. I agree with the premise but the conclusion needs modification.

I’m not advocating that in spite of what’s unfeasible, our government fanatically cling to the “pure” ideology of individuals’ exercising their own judgments within a free enterprise system.

It is not advocating a "pure ideology." Its a simple idea that we treat one another fairly is just a matter of mutual respect. Of course some idiot out there will violate someone's rights but there is justification for recourse, this is the purpose of the judicial and executive branches. Similarly free enterprise systems utilizes mutual respect to create economic transactions, we each respect the needs of the other and we try to cut a deal. We don't we really need the government telling us what is good and bad because the market already provides us with financial incentives in most cases. I think the idea of an income tax code that "promotes fairness" results in the bloated, confusing tax code we are currently dealing with. I could agree to disagree on this point.

I understand conservatives that are opposed to government welfare except when those welfare benefits fall into their own hands.

Refer to the first message of this topic thread.
Respectfully, Supposn

Hmm, that wasn't a irrational low blow to conservatives loaded with logical fallacy. All rational humans (regardless of political affiliation) are opposed to government except when it benefits them. Your logic is also faulty with respect to the "contradiction" in my conclusions on income taxes. To get the two income tax policies consistent we could either increase the capital gains tax, or decrease the income tax rates. Both conclusions are consistent with the premise that there shouldn't be a discrepancy.

I reinforce my reasoning by stating that the government exceeds their budget now and giving them more to play with is not a good idea. With respect to the debt, as with individual credit responsibility, I argue the solution is not to extend more funding to cover existing debt. I don't think its justifiable to ask for a raise from your employer, because of an inability to effectively manage funds. Its time to cut back on government spending, not encourage it by feeding it.

To create a tax code that engineers social fairness, is a mind boggling task; I suggest we make this issue less important by reducing income taxes.
Respectfully, HTTP

 

[imagep]

sounds like Envy to me

There is a difference between envy and fairness.

you probably think people who work hard and save ought to have half their estate confiscated too because you won't have that sort of money when you die?

I dont understand your thought logic with this. After I die, I really wont care about other people having half their estate confisticated. None of us will care because we will be dead. Maybe when we are live we would like to see our family get our savings, if thats the case we should give it to them while we are alive, subject to the current gift tax or possibly subject to the rate of income tax that they are subject to.

I think that a lot of times people just really don't understand the net result of inheritance tax. If we had no inheritance tax then we would have to pay more tax while we are living. If we had a fairly high inheritance tax we would get to pay less tax while we are living. It's a zero sum game.

By having an inheritance tax, and thus being able to enjoy lower taxes while we are alive, we are able to develop more net worth during our life times. We are able to spend more money on our children while they are still children (rather than them getting our money when we are 95 and they are 72). Isn't it much more important to you that you provide your children with a good lifestyle when they are children than you providing them with a good lifestyle when they are old and wrinkled? Arn't music lessons at the age of 10 or 12 more valuable than music lessons at the age of 84? Isn't a week of touring the country as a child more important than a week of touring the country when you are 68? Isn't it more important to get braces when you are 15 than it is to get braces when you are 75?

Inheritance tax is basically a deferment of taxes. Because we have inheritance tax we get to wait until after we are dead and no longer have any use for our wealth to pay part of our taxes rather than having to pay it when we are younger and have lots of need for wealth.

There are lots and lots and lots of advantages to inheritance tax over other forms of taxation. Sure, none of us want to pay any tax, but since we will always have to pay some type of tax, it just makes good sense to pay the type of tax that is least harmful to our economy and also to us personally.

Most people who object to inheritance tax have either been brainwashed by far right-wingers, or somehow have a feeling of entitlement like the lazy poor. Personally, I would be embarissed to admit to either case.

 

[I'm Supposn]

Washunut, TurtleDude and Phattonez, I’ve been reading your messages.
. Please consider my message #21 as a response to you all.
Respectfully, Supposn