Thread: Why should capital gains be taxed?

capital gains should of course be taxed, as they are income.

however, taxpayers should be able to pay a lower rate on capital gains income that comes from investment money that they already paid taxes on.

however, they should PROVE that their investment money was already taxed.


....or, a much easier solution, is simply have ALL investment money be tax-deductable for income taxes, and then be taxed at normal rates for capital gains taxes.

Originally Posted by Thunder

capital gains should of course be taxed, as they are income.

however, taxpayers should be able to pay a lower rate on capital gains income that comes from investment money that they already paid taxes on.

however, they should PROVE that their investment money was already taxed.


....or, a much easier solution, is simply have ALL investment money be tax-deductable for income taxes, and then be taxed at normal rates for capital gains taxes.

Thunder, long term capital gains are profits from sales transactions. The sold items must have been owned by the sellers for a continuous year prior to the sales date and the items may not be stock-in-trade.
You can’t legally sell the same item twice unless you first repurchase the item. It’s impossible to have paid taxes upon the sale of an item prior to the sale of the item.

Respectfully, Supposn

any non-taxed income that goes into a retirement plan or stocks, should be taxed as normal income when you withdraw it.

income that is taxed, and then goes into stocks, should be taxed at a lower rate than regular income, once withdrawn.

its that simple.

Originally Posted by TurtleDude

and he pays more in a month than most people pay in federal income taxes in a decade

That is irrelevant and doesn't change the fact that he and others who's income is primarily from investments, pay a lower tax rate.

"The Tax Reform Act of 1986 shifted a large part of the tax burden from individuals to corporations; it also exempted millions of low-income households from federal income taxes. Reagan called it "a sweeping victory for fairness" where "vanishing loopholes and a minimum tax will mean that everybody and every corporation pay their fair share."

Bruce Bartlett, a former domestic policy adviser in the Reagan White House, says fairness was the touchstone for the Tax Reform Act.

"Keep in mind that one of the most important elements of that deal was that Ronald Reagan agreed to raise the capital gains tax rate from 20 percent to 28 percent, because he agreed with the Democrats that capital gains and ordinary income ought to be taxed at the same rate," says Bartlett, who is also the author of The Benefit and the Burden, a new book on tax reform."

Times Have Changed Since Reagan's 1986 Tax Reform : NPR

Originally Posted by TurtleDude, replying to another

and he [Romney] pays more in a month than most people pay in federal income taxes in a decade

the whining is pathetic

I agree, so why do you do it? On someone else's behalf, no less . . . . .

Originally Posted by imagep

I am not so sure that the migration of tallent has as much to do with taxation as it does personal freedom and safety. If I remember correctly, Einstine moved to the US because he feared the political situation of 1920's and 30's Germany. I doubt that anyone can prove or disprove than any brain drain exists at all, let alone prove that it is connected to taxation.

Einstein emigrated way before the '50's. You'll have to try again for a relevant example. The "brain drain" in today's world typically refers to talented individuals relocating to industrialized nations from third-world or simply less-industrialized nations so as to increase their personal development potential. That was not always the case.

But remember, we're talking about Catawba's assertion about the '50's. There is very little to be found via Google on the brain drain in the '50's. I can only tell you that, being an old guy, I was around then and distinctly remember the phenomenon. I don't recall names or details, but I definitely recall that it happened. Various entertainers and highly-paid athletes left Britain some of the Scandinavian countries and emigrated to countries such as the US and Australia and other European countries (Luxembourg, IIRC) where tax rates were significantly less.

In today's world, check around and you'll find considerable concern about 'brain drain' in several contexts, mainly in specialized talent such as doc's and engineers, though not in terms of relative taxation. That seems to have fallen by the wayside with tax reforms in the UK and the US in the early '60's (Kennedy's reforms in '62, for example).

Originally Posted by Catawba

"The Tax Reform Act of 1986 shifted a large part of the tax burden from individuals to corporations; it also exempted millions of low-income households from federal income taxes. Reagan called it "a sweeping victory for fairness" where "vanishing loopholes and a minimum tax will mean that everybody and every corporation pay their fair share."

Bruce Bartlett, a former domestic policy adviser in the Reagan White House, says fairness was the touchstone for the Tax Reform Act.

"Keep in mind that one of the most important elements of that deal was that Ronald Reagan agreed to raise the capital gains tax rate from 20 percent to 28 percent, because he agreed with the Democrats that capital gains and ordinary income ought to be taxed at the same rate," says Bartlett, who is also the author of The Benefit and the Burden, a new book on tax reform."

Times Have Changed Since Reagan's 1986 Tax Reform : NPR

Which is why the highest marginal rates (90%, 92%) from the decades prior to the Reagan reforms are simply not comparable to those afterwards. So those of you proselytizing for a return to those pre-Reagan capital gains rates need to include that in your thinking; so far, I see none who do.

Originally Posted by Catawba

As noted below the graph which I provided a link for above:


"Numbers include income taxes, capital-gains taxes, payroll taxes, estate taxes, gift taxes and corporate taxes (which are effectively paid by stockholders)."

Good lord man.
That doesn't mean that they are effective rates of taxation.
Where are the deductions factored in?

Originally Posted by oldreliable67

Which is why the highest marginal rates (90%, 92%) from the decades prior to the Reagan reforms are simply not comparable to those afterwards. So those of you proselytizing for a return to those pre-Reagan capital gains rates need to include that in your thinking; so far, I see none who do.

You are not considering the reductions in tax rates that have been made since Reagan to Estate taxes, Capital gains and Dividend taxes, and corporate taxes and loopholes, all of which have combined to provide a lower effective tax rate for investors than for the middle class.