Capital gains income’s tax discount is unjustified

[Supposn]

A significant and clear benefit to our economy MIGHT possibly justify additional federal intervention within our free enterprise system.

This tax reduction is granted to incomes rather than to investments or savings. It does not clearly or directly induce investment or savings to be greater than otherwise.

If the reduced tax rate was the determining factor as to where and how savings or investments were allocated, there’s no reason to suppose that tax treatment favoring capital gains induced superior economic decisions.

The concept of the free enterprise market is investors’ choices dependent upon their determining the probability and rewards for success. What if tax treatment favoring capital gains actually affects savings and investments by affecting the value of probable rewards?

If government’s tax policies are enticing more investment in some classification of enterprises, it’s logical to believe that less favored enterprises are less able to attract investment capital. If that’s the case, government would be replacing Adam Smith’s unseen clever hand with the government’s clumsy claw. That’s completely contrary to the concept of free enterprise and the wisdom of the market.

When the determining factor that induced a sale is due to tax policy, the question of a sale’s benefit to our nation’s economy is questionable. If selling an enterprise in its entirety or as one or more segments are marginal decisions based upon tax considerations, the retaining, nurturing and re-investment into the enterprise may be of equal or greater benefit to our nation. Within such cases, a favorable tax treatment (at very least) denies us of federal revenue and is further likely to be of net detriment our nation’s economic best interests.

In cases where the determining factor to sell was not due to a tax policy, the sale would have been transacted regardless (of that tax policy). Profits due to transfers of wealth in themselves are of no greater or less than any other income sources’ economic benefit to our nation; income is income.

The tax reduction favoring capital gains profits is unjustified.

Respectfully, Supposn

[Kathianne]

Not quite sure what brought on the above rant, but thought that some idea why reducing capital gain rates are often one of the best ways to help with a sluggish economy. Of course, there must be gains to speak of and a faith that the government isn't going to continually disrupt the stability of markets and regulations:

http://www.investopedia.com/terms/c/capitalgain.asp


What Does Capital Gain Mean?
1. An increase in the value of a capital asset (investment or real estate) that gives it a higher worth than the purchase price. The gain is not realized until the asset is sold. A capital gain may be short term (one year or less) or long term (more than one year) and must be claimed on income taxes. A capital loss is incurred when there is a decrease in the capital asset value compared to an asset's purchase price.

2. Profit that results when the price of a security held by a mutual fund rises above its purchase price and the security is sold (realized gain). If the security continues to be held, the gain is unrealized. A capital loss would occur when the opposite takes place.

So 10 years ago you bought a house for 200k and today sell it at $350k. $150k is subject to whatever the capital gains tax rate is. However if you instead turn around and buy a house for $550k in the same year, no tax penalty. Same house for business investments.

Today if one could get a gain on long-term investment, there are real incentives to squirrel, not reinvest those profits.

Since 2008 on the 10 and 15% income brackets, capital gains have not been taxed and in higher tax brackets, the traditionally higher capital gains rates were reduced. These 'breaks' will expire in 2011, though Congress is rethinking that part of the Bush tax cut expiration.

Seems to me that there has been so little investments made, not too mention gains that this whole discussion is currently one of those trick issues that Congress uses to sound useful.

[PostmodernProphet]

the net impact of a capital gains tax is stagnation......if people fear the imposition of a tax on the sale of property, they refrain from selling property......real estate does not change hands, corporate stock does not change hands....the free trading of both are necessary for a properly functioning economy.....when a person sells a $200k piece of real estate they may do a variety of things with the proceeds.....they may buy another piece of real estate....they may buy something other than real estate, or they may bank the proceeds which permits another person to borrow money to buy something....it is projected that every dollar received on the sale of real property actually generates $7 in the economy before it settles down.....imposing a high tax on capital gains stifles that investment.....

in addition, capital gains taxes on the sale of corporate stock results in poor corporate performance.......in a totally free system a person who is unhappy with the management of his corporate investments can divest himself of that company's stock and buy something else.....however, if the tax on any gains he has made are too high he may stay with the poor performance rather than pay the high tax.....

[red states rule]

With the Dems obsession with increasing taxes, they are inviting a MASSIVE SELLOFF in the stock maket

As we get closer to the ened of the year, we may see many investors selloff their stock so they will pay 15% captial gauines tax VS the higher tax next year

Just what our econiomy needs right?

[Supposn]

Not quite sure what brought on the above rant, but thought that some idea why reducing capital gain rates are often one of the best ways to help with a sluggish economy. Of course, there must be gains to speak of and a faith that the government isn't going to continually disrupt the stability of markets and regulations:

http://www.investopedia.com/terms/c/capitalgain.asp


So 10 years ago you bought a house for 200k and today sell it at $350k. $150k is subject to whatever the capital gains tax rate is. However if you instead turn around and buy a house for $550k in the same year, no tax penalty. Same house for business investments.

Today if one could get a gain on long-term investment, there are real incentives to squirrel, not reinvest those profits.

Since 2008 on the 10 and 15% income brackets, capital gains have not been taxed and in higher tax brackets, the traditionally higher capital gains rates were reduced. These 'breaks' will expire in 2011, though Congress is rethinking that part of the Bush tax cut expiration.

Seems to me that there has been so little investments made, not too mention gains that this whole discussion is currently one of those trick issues that Congress uses to sound useful.

Kathianne, USA’s tax discount for long term capital gains reduces government’s revenues but it does not increase the net amounts invested within the USA. It induces aggregate shifting of investments to favor one category of investment over another. The incomes of those who nurture and reinvest their efforts and wealth into their enterprises are certainly economically no less worthy than that of investors who take the money and run after some time in excess of 365 days.

I'm not opposed to speculation. I'm opposed to government favoring speculators which is not optimum economic policy (if we really trust neutral public markets and free enterprise).

It is politically unfeasible to eliminate the tax discount for profits due to sales of residences not rolled into the purchase of another home but the amounts could be limited to the median price of a U.S. private residence when the law’s passed. That “capped” amount could be thereafter annually adjusted to the U.S. dollar’s purchasing power. Other than that the unjustified tax reduction favoring capital gains profits should be eliminated.

Your statement “Today if one could get a gain on long-term investment, there are real incentives to squirrel, not reinvest those profits” seems contrary to the point you’re trying to make?

Respectfully, Supposn

[Supposn]

I apologize to group members for not responding sooner. I apparently did not set my default thread subscription mode properly.

Respectfully, Supposn

[red states rule]

Kathianne, USA’s tax discount for long term capital gains reduces government’s revenues but it does not increase the net amounts invested within the USA. It induces aggregate shifting of investments to favor one category of investment over another. The incomes of those who nurture and reinvest their efforts and wealth into their enterprises are certainly economically no less worthy than that of investors who take the money and run after some time in excess of 365 days.

I'm not opposed to speculation. I'm opposed to government favoring speculators which is not optimum economic policy (if we really trust neutral public markets and free enterprise).

It is politically unfeasible to eliminate the tax discount for profits due to sales of residences not rolled into the purchase of another home but the amounts could be limited to the median price of a U.S. private residence when the law’s passed. That “capped” amount could be thereafter annually adjusted to the U.S. dollar’s purchasing power. Other than that the unjustified tax reduction favoring capital gains profits should be eliminated.

Your statement “Today if one could get a gain on long-term investment, there are real incentives to squirrel, not reinvest those profits” seems contrary to the point you’re trying to make?

Respectfully, Supposn

Where did you learn economics?

EVERYTIME the captial gaines tax has been cut, revenues to the government have INCREASED!!!!

Remember the heat the ABC took for the mod putting Obama on the spot over this very topic? Obama was busted and when cornered on increasing the capital gaines tax revenues drop - Obama fell back on the "fairness" BS

[Supposn]

With the Dems obsession with increasing taxes, they are inviting a MASSIVE SELLOFF in the stock maket

As we get closer to the ened of the year, we may see many investors selloff their stock so they will pay 15% captial gauines tax VS the higher tax next year

Just what our econiomy needs right?

Red states rule, after one divests themselves of their holdings, what do they do with the cash?

Respectfully, Supposn

[red states rule]

Red states rule, after one divests themselves of their holdings, what do they do with the cash?

Respectfully, Supposn

They sure as hell wilol not imvest it here with the higher taxes cutting into their profits

I will never undersatnd how ANYONE thinks higher taxes is a good thing for the economy

Punishing achievement has never worked anywhere it has been tried - and it never will

[Supposn]

Postmodern Prophet, I'm among those that advocate to the greatest extent feasible we incrementally and simultaneously shifting our revenue sources to a general consumption tax rather than taxing incomes.

Respectfully, Supposn

[PostmodernProphet]

Postmodern Prophet, I'm among those that advocate to the greatest extent feasible we incrementally and simultaneously shifting our revenue sources to a general consumption tax rather than taxing incomes.

Respectfully, Supposn

I fail to see how that would change my answer.....if we did so there would be no capital gains tax and your question would be moot....until we do so, lower taxes on capital gains taxes are necessary to prevent stagnation of the economy.......

[fj1200]

Kathianne, USA’s tax discount for long term capital gains reduces government’s revenues but it does not increase the net amounts invested within the USA. It induces aggregate shifting of investments to favor one category of investment over another. The incomes of those who nurture and reinvest their efforts and wealth into their enterprises are certainly economically no less worthy than that of investors who take the money and run after some time in excess of 365 days.

First sentence, false and false. Revenues increase after CG tax cuts, look at the '97 cuts and subsequent CG revenues. Lower taxes will always attract investment, how much depends on other options. It could though alter investment strategies, i.e. lower rates on dividends, interest, than CGs. Indexing of CG to inflation should be the next step IMO.


I'm not opposed to speculation. I'm opposed to government favoring speculators which is not optimum economic policy (if we really trust neutral public markets and free enterprise).

Investing is different than speculation, your choice of word is telling here. Job creation is based on private investment which is based on tax rates. Income taxes are of a different category in my opinion. The IT rate of an employee isn't necessarily of concern to the business owner/entrepreneur.


It is politically unfeasible to eliminate the tax discount for profits due to sales of residences not rolled into the purchase of another home but the amounts could be limited to the median price of a U.S. private residence when the law’s passed. That “capped” amount could be thereafter annually adjusted to the U.S. dollar’s purchasing power. Other than that the unjustified tax reduction favoring capital gains profits should be eliminated.

You are apparently concerned about the favoring of investment types and eliminating the supposed favoritism yet you are now proposing a new type of favoritism based on a definition that you decided on; You should work on your consistency.


Your statement “Today if one could get a gain on long-term investment, there are real incentives to squirrel, not reinvest those profits” seems contrary to the point you’re trying to make?

Respectfully, Supposn

New investment is dependent on future tax rates and the expectation of those tax rates. A high CG tax will discourage asset sales and will also discourage the reinvestment into other assets.

[fj1200]

The tax reduction favoring capital gains profits is unjustified.

Respectfully, Supposn

There is so much inconsistency in the above post a simple "false" will suffice.

[Pagan]

Actually it's going to be two fold for me.

1. I'm selling a good chunk of stock before the tax's hit.
2. The other I'm going to leave in until the tax's come down, which I'm pretty confident it will. Not immediately but it will, as always Government is very fickle.

I see stock as long term investment, idiot "day traders" create much chaos which causes problems with their gambling.

Anyway higher tax's are coming for no one is willing to give up anything to cut the size, scope and power of Government. Both sides (right and left) want the other to give up their "pet" projects but are not willing to cut their own pork. So that only leaves increasing tax's which will further accelerate the collapse of our nation.

[fj1200]

Actually it's going to be two fold for me.

1. I'm selling a good chunk of stock before the tax's hit.
2. The other I'm going to leave in until the tax's come down, which I'm pretty confident it will. Not immediately but it will, as always Government is very fickle.

That's the idiocy of CG taxes and our overall taxation system; making decisions that reflect the whims of elected officials rather than the best decision for you. By extension, the private sector and job creation is harmed because of silly rules.

[PostmodernProphet]

I see stock as long term investment, idiot "day traders" create much chaos which causes problems with their gambling.


I agree.....I heard somewhere recently (a television ad?) that the average length of time a stock sale is held is something like 17 seconds......I only own stock in one company.....I bought it in 2001.....since then it has never been worth less than I bought it for and it split a few years back.......

[Supposn]

Fj1200, I’ve been reviewing some discussion threads in various groups. You and I are certainly opposed with regard to capital gains taxation of commercial enterprises. This exchange caught my eye.

I stated that I'm not opposed to speculation. I'm opposed to government favoring speculators which is not optimum economic policy (if we really trust neutral public markets and free enterprise).

You responded:

Investing is different than speculation, your choice of word is telling here.

Fj1200, I contend there’s more or less speculation involved within most if not all investment enterprises.

A non speculative investment would be an absolutely “sure thing”. Due to Murphy’s Law, (i.e. whatever can possibly go wrong will probably go wrong in least favorable manner, location and moment of time and whatever cannot possibly go wrong will at some moment go wrong). If any investments were actually “sure things”, they were certainly extremely rare investment opportunities.

Why do you contend that “Investing is different than speculation”?

Respectfully, Supposn

[Little-Acorn]

Not quite sure what brought on the above rant, but thought that some idea why reducing capital gain rates are often one of the best ways to help with a sluggish economy.

Remember the "balanced" budgets that then-President Clinton was so proud of in the mid-1990s? (They weren't actually balanced, Slick Willie used some accounting tricks, but they were close.) Guess what caused that.

Capital Gains Tax rate cuts.

Clinton fought tooth and nail against them, and vetoed them three times. But the Republican-dominated Congress kept re-passing them and sending them to his desk. Finally with an election looming in 1996, he signed them, saying they were "broken but we'll fix them later". (He never changed them afterward.)

When the rates went down, people who were holding large-capital items, which they could not sell without incurring losses from the tax, suddenly found they could sell them without loss. Lots of people did, commerce took off, and revenue from the Capital Gains Taxes flooded into the Treasury, more than making up for the smaller percentage of each sale the govt took. Overall govt revenue soared, enough to (almost) balance the budgets for several years, and the recession caused by George H.W. Bush (41)'s "Read my lips" tax increases ended.

Now we have the same leftist fanatics telling us the same thing as they did then: Capital Gains tax rates shouldn't be lowered, in fact they should be raised.
Some people never learn. :coffee:

[Missileman]

A significant and clear benefit to our economy MIGHT possibly justify additional federal intervention within our free enterprise system.

I'm of the opinion they've done quite enough damage already. Way past time to rein them in.

[Supposn]

Excerpted from the first message of this discussion thread: When the determining factor that induced a sale is due to tax policy, the question of a sale’s benefit to our nation’s economy is questionable. If selling an enterprise in its entirety or as one or more segments are marginal decisions based upon tax considerations, the retaining, nurturing and re-investment into the enterprise may be of equal or greater benefit to our nation. Within such cases, a favorable tax treatment (at very least) denies us of federal revenue and is further likely to be of net detriment our nation’s economic best interests.

In cases where the determining factor to sell was not due to a tax policy, the sale would have been transacted regardless (of that tax policy). Profits due to transfers of wealth in themselves are of no greater or less than any other income sources’ economic benefit to our nation; income is income.

The tax reduction favoring capital gains profits is unjustified.


New investment is dependent on future tax rates and the expectation of those tax rates. A high CG tax will discourage asset sales and will also discourage the reinvestment into other assets.

Fj1200, the purchase of stocks and bonds, gold OR bank deposits are not factors within the calculation of gross domestic product, (GDP); economists consider these to be “transfers of wealth”. The formulas recognizes purchases of goods and services within the USA as funding attempts to produce increased values of goods and services as “investments” contributing to USA’s GDP. Even after excluding capital gains on homes, the great preponderance of remaining capital gains qualifying for such favorable tax treatments are due to transfers of wealth rather than to investments.

Respectfully, Supposn

[fj1200]

I'm not sure why I'm bothering to respond, maybe boredom now or the boredom that will come in 4 months when you get around to responding.


Fj1200, I’ve been reviewing some discussion threads in various groups. You and I are certainly opposed with regard to capital gains taxation of commercial enterprises. This exchange caught my eye.

Yes, your populist rhetoric against the truth that economic freedom benefits all.


I stated that I'm not opposed to speculation. I'm opposed to government favoring speculators which is not optimum economic policy (if we really trust neutral public markets and free enterprise).

You responded:

There is a subtle difference so you'll need to put on your thinking cap.

In finance, speculation is a financial action that does not promise safety of the initial investment along with the return on the principal sum.[1] Speculation (http://en.wikipedia.org/wiki/Speculation) typically involves the lending of money or the purchase of assets, equity or debt but in a manner that has not been given thorough analysis or is deemed to have low margin of safety or a significant risk of the loss of the principal investment. The term, "speculation," which is formally defined as above in Graham and Dodd's 1934 text, Security Analysis, contrasts with the term "investment," which is a financial operation that, upon thorough analysis, promises safety of principal and a satisfactory return.[1]

Not a perfect distinction between the two but it will work for now. I'd also add that speculation tends to where probabilities are a 50/50 bet such as commodities. Investing in the stock market, for example, is a market that tends to rise over time so you don't necessarily need to beat everyone to win.


Fj1200, I contend there’s more or less speculation involved within most if not all investment enterprises.

A non speculative investment would be an absolutely “sure thing”. Due to Murphy’s Law, (i.e. whatever can possibly go wrong will probably go wrong in least favorable manner, location and moment of time and whatever cannot possibly go wrong will at some moment go wrong). If any investments were actually “sure things”, they were certainly extremely rare investment opportunities.

Why do you contend that “Investing is different than speculation”?

You're invoking Murphy's Law when talking about investing? :laugh: It's not speculation it's called risk. Do we need to get into risk vs. reward too? :rolleyes: Risk can be mitigated, speculation is a bet.

[fj1200]

Excerpted from the first message of this discussion thread: When the determining factor that induced a sale is due to tax policy, the question of a sale’s benefit to our nation’s economy is questionable. If selling an enterprise in its entirety or as one or more segments are marginal decisions based upon tax considerations, the retaining, nurturing and re-investment into the enterprise may be of equal or greater benefit to our nation. Within such cases, a favorable tax treatment (at very least) denies us of federal revenue and is further likely to be of net detriment our nation’s economic best interests.

What you fail to realize is that our backwards tax policy is the reason that taxes DO impact whether an asset is sold or not. Besides as Acorn points out it's the reduction of the CG tax that is actually in the nation's benefit. You'll have quite the difficult time in proving that Federal policy, ANY Federal policy, actually benefits our "nation's economic best interests." Good luck with that one. :laugh:


In cases where the determining factor to sell was not due to a tax policy, the sale would have been transacted regardless (of that tax policy). Profits due to transfers of wealth in themselves are of no greater or less than any other income sources’ economic benefit to our nation; income is income.

The tax reduction favoring capital gains profits is unjustified.

"Income" is NOT "income." There is risk "income" and wages "income" and the tax treatment of those, and others, should be treated differently given our current tax structure.

This is going to blow your mind but Capital Gains tax treatment is actually at a disadvantage compared to others. Under our current treatment the inflation portion of a capital gain is taxed. I'll let you think about that one.


Fj1200, the purchase of stocks and bonds, gold OR bank deposits are not factors within the calculation of gross domestic product, (GDP); economists consider these to be “transfers of wealth”. The formulas recognizes purchases of goods and services within the USA as funding attempts to produce increased values of goods and services as “investments” contributing to USA’s GDP. Even after excluding capital gains on homes, the great preponderance of remaining capital gains qualifying for such favorable tax treatments are due to transfers of wealth rather than to investments.

Did I say otherwise or did you just want to display your typing abilities?

[Supposn]

........ You're invoking Murphy's Law when talking about investing? :laugh: It's not speculation it's called risk. Do we need to get into risk vs. reward too? :rolleyes: Risk can be mitigated, speculation is a bet.

Fj1200, determinations of Investments or transfers of funds can be dependent upon logical analysis of actuarial tables and other statistics; they can also be dependent upon a flip of a coin. The extents of risks differ but there’s more or less some degree of speculation within every profit motivated Investment or transfer of funds. You’re contending otherwise?

Respectfully, Supposn
/////////

http://www.merriam-webster.com/dictionary/speculate
Definition of SPECULATE
intransitive verb

2: to assume a business risk in hope of gain; especially : to buy or sell in expectation of profiting from market fluctuations
/////////

http://www.merriam-webster.com/dictionary/risk?show=0&t=1300515024
Definition of RISK
1: possibility of loss or injury : PERIL
2: someone or something that creates or suggests a hazard
3a: the chance of loss or the perils to the subject matter of an insurance contract; also : the degree of probability of such loss b : a person or thing that is a specified hazard to an insurer c : an insurance hazard from a specified cause or source <war risk>
4: the chance that an investment (as a stock or commodity) will lose value
/////////

http://www.merriam-webster.com/dictionary/bet
Definition of BET
1a: something that is laid, staked, or pledged typically between two parties on the outcome of a contest or a contingent issue : WAGER —often used figuratively in such phrases as all bets are off to stress the uncertainty of an outcome b : the act of giving such a pledge
2: something to wager on
3: a choice made by consideration of probabilities <your best bet is the back road>
////////

[Supposn]

What you fail to realize is that our backwards tax policy is the reason that taxes DO impact whether an asset is sold or not. ............... "Income" is NOT "income." There is risk "income" and wages "income" and the tax treatment of those, and others, should be treated differently given our current tax structure.

Fj1200, we generally all try to act in what we perceive to be our best interests and our environments are major, (if not usually the primary) factors determining our activities.

You incorrectly wrote I fail “to realize is that our backwards tax policy is the reason that taxes DO impact whether an asset is sold or not”. I realize and agree that tax treatment of long term capital gains, (CG) favors decisions to sell rather or to retain a full or a part ownership of an assets.

I further realize that due to government’s tax policies enticing more investment in some classification of enterprises, it’s logical to believe that less favored enterprises are less able to attract investment capital. Government's replacing Adam Smith’s unseen equitable light hand with the government’s heavy thumb upon the scales of our markets. That’s completely contrary to the concept of free enterprise and the wisdom of the market.

If we eliminate favorable tax treatment for commercial long term capital gains, the previously favored classifications of enterprises would be induced to offer greater prospects of profits (in order to attract investors).

If you share my confidence in an open competitive free enterprise market, you’d be opposed to special strokes for special folks. If we permit the operation of a level competitive market, profits similar to waters) will seek their own proper levels.

Respectfully, Supposn

[fj1200]

Fj1200, determinations of Investments or transfers of funds can be dependent upon logical analysis of actuarial tables and other statistics; they can also be dependent upon a flip of a coin. The extents of risks differ but there’s more or less some degree of speculation within every profit motivated Investment or transfer of funds. You’re contending otherwise?

We can get into a semantics argument if you like but none of those definitions alter what I've said which is that you see investing as "speculation." That you use that word tells me much about how you see it, investing is nothing more than luck and investors are not truly entitled to the proceeds and as such should be subjected to higher levels of taxation. Your OP is based on the same faulty logic and is nothing we should base national policy on.

[fj1200]

Fj1200, we generally all try to act in what we perceive to be our best interests and our environments are major, (if not usually the primary) factors determining our activities.

That's quite the non sentence there.


You incorrectly wrote I fail “to realize is that our backwards tax policy is the reason that taxes DO impact whether an asset is sold or not”. I realize and agree that tax treatment of long term capital gains, (CG) favors decisions to sell rather or to retain a full or a part ownership of an assets.

No you don't, and I wasn't just referring to CG taxes. You think that taxes are the primary determinant of making investment decisions; you just said as much and it's clearly not the case. Your words, "tax treatment ... favors decisions to sell or to retain..." So which is it?


I further realize that due to government’s tax policies enticing more investment in some classification of enterprises, it’s logical to believe that less favored enterprises are less able to attract investment capital. Government's replacing Adam Smith’s unseen equitable light hand with the government’s heavy thumb upon the scales of our markets. That’s completely contrary to the concept of free enterprise and the wisdom of the market.

I agree that some enterprises are more favored than others because of government intervention but it's not the tax treatment that is doing the favoring. Our tax revenues are derived based primarily on income (81% income and payroll taxes in 2008 seen here (http://www.taxpolicycenter.org/briefing-book/background/numbers/revenue.cfm)) and in order to grow the revenue side of our income statement we need to encourage business growth, read capital formation, and a lowering of any tax that inhibits that is IN OUR NATIONAL BEST INTEREST.

Did you notice the primary word in the above sentence? It was subtle but I have confidence you'll find it.


If we eliminate favorable tax treatment for commercial long term capital gains, the previously favored classifications of enterprises would be induced to offer greater prospects of profits (in order to attract investors).

Tax treatment should not be a consideration AT ALL in making investment decisions. You don't really have a handle on investing do you? Silly question I guess, you refer to it as "speculating."


If you share my confidence in an open competitive free enterprise market, you’d be opposed to special strokes for special folks. If we permit the operation of a level competitive market, profits similar to waters) will seek their own proper levels.

I do but I thought you were concerned about our "national best interests"? Because reducing/eliminating CG tax rates would further that. I also think we need to eliminate corporate income taxes as well, it's just another tax on capital that is preventing US businesses from being competitive on a global scale, studies also show that one of the beneficiaries of a DOMESTIC corporate tax is FOREIGN labor.

[Supposn]

We can get into a semantics argument if you like but none of those definitions alter what I've said which is that you see investing as "speculation." That you use that word tells me much about how you see it, investing is nothing more than luck and investors are not truly entitled to the proceeds and as such should be subjected to higher levels of taxation. Your OP is based on the same faulty logic and is nothing we should base national policy on.

Fj1200, I stated there’s more or less speculation involved within most if not all investment enterprises and I'm NOT opposed to speculation.

I suspect otherwise but it’s conceivable you may be able to excerpt some of my paragraphs to give the appearance of my opposing to speculation or speculators; Due to my contending speculation is integral to investing I did NOT equate “speculation” and “investing”. Water is integral to many liquids but those liquids are not entirely water.

I’m generally opposed to government’s policies favoring any particular class of incomes or taxpayers. Such policies are generally not a net benefit (but rather a detriment) to our economy.

I’m certainly opposed to the favorable tax treatment being granted to commercail long term capital gains, (CGs). This tax reduction is granted to incomes rather than to investments or savings. It does not clearly or directly induce investment or savings to be greater than otherwise. There’s no reason to suppose that tax treatment favoring capital gains over other incomes improves our economy.

On the contrary if you share my confidence in the concept of consistently equitably open competitive markets providing “level playing fields”, you too would likewise be opposing favorable tax treatment of CGs. Our government should not be choosing winners and losers.

Respectfully, Supposn

[fj1200]

Fj1200, I stated there’s more or less speculation involved within most if not all investment enterprises and I'm NOT opposed to speculation.

I suspect otherwise but it’s conceivable you may be able to excerpt some of my paragraphs to give the appearance of my opposing to speculation or speculators; Due to my contending speculation is integral to investing I did NOT equate “speculation” and “investing”. Water is integral to many liquids but those liquids are not entirely water.

I am quite adept at reading between the lines and being able to recall your positions on other issues and draw reasonable conclusions... unless of course you didn't mean to say what you said. ;)


I’m generally opposed to government’s policies favoring any particular class of incomes or taxpayers. Such policies are generally not a net benefit (but rather a detriment) to our economy.

I would be as well but not all "incomes" are created equal and a CG is not "income" it is a gain based on investment. A lower, or eliminated, CG tax is helpful to all involved and given that investment gains were already taxed previously your argument again falls flat. You still haven't addressed Acorn's post that showed that a cut of the CG rates led to an uptick in both CG revenues AND subsequently in Income Tax receipts. How's that for national best interest eh?


I’m certainly opposed to the favorable tax treatment being granted to commercail long term capital gains, (CGs). This tax reduction is granted to incomes rather than to investments or savings. It does not clearly or directly induce investment or savings to be greater than otherwise. There’s no reason to suppose that tax treatment favoring capital gains over other incomes improves our economy.

You are completely wrong and the data proves it. At a base level, if you tax something you will get less of it and we in this country need to encourage CAPITAL formation.


On the contrary if you share my confidence in the concept of consistently equitably open competitive markets providing “level playing fields”, you too would likewise be opposing favorable tax treatment of CGs. Our government should not be choosing winners and losers.

I completely agree with that last part but all of your assumptions leading up to that point are false.

[Supposn]

Originally Posted by Supposn
Fj1200, I stated there’s more or less speculation involved within most if not all investment enterprises and I'm NOT opposed to speculation.

I suspect otherwise but it’s conceivable you may be able to excerpt some of my paragraphs to give the appearance of my opposing to speculation or speculators; Due to my contending speculation is integral to investing I did NOT equate “speculation” and “investing”. Water is integral to many liquids but those liquids are not entirely water.


I am quite adept at reading between the lines and being able to recall your positions on other issues and draw reasonable conclusions... unless of course you didn't mean to say what you said.

Fj1200, do you also consider yourself to be adept at reading tea leaves?

Am I to believe that you’ve found something that I’ve written somewhere at sometime that you’re able to take out of context in order to falsely demonstrate that I’ve equated “investment” and “speculation” or you haven’t yet been able to do so?

Respectfully, Supposn

[Supposn]

Originally Posted by Supposn: I’m generally opposed to government’s policies favoring any particular class of incomes or taxpayers. Such policies are generally not a net benefit (but rather a detriment) to our economy.


I would be as well but not all "incomes" are created equal and a CG is not "income" it is a gain based on investment. A lower, or eliminated, CG tax is helpful to all involved and given that investment gains were already taxed previously your argument again falls flat. You still haven't addressed Acorn's post that showed that a cut of the CG rates led to an uptick in both CG revenues AND subsequently in Income Tax receipts. How's that for national best interest eh?

The description within IRS regulations is “long term capital gains INCOME”; income is income.

What did you mean by ‘‘and given that investment gains were already taxed previously”? Capital gains are realized due to the sale or trade of an asset. How many times can you resell the same asset without first recovering the asset?

Acorn’s contention is nonsense. Capital gains are “one shot” gains.

Within transactions where the favorable tax treatment was not a primary factor of the decision to sell an asset held for a year or more, the sale would have been consummated if the lower tax rate had not been granted. Thus in those cases the only accomplisments due to the discounted tax rate was less than otherwise federal revenues and greater burdens shifted upon all other then current and/or future tax payers.

It is only within transactions where the determination to sell such assets were in doubt and a primary factor of the decision to sell was due to the favorable tax treatment, that those aggregate decisions’ national benefits are in doubt.

Within those transactions where tax policy tipped the scales of decisions, government’s tax policy is a primary determining factor. Within these “marginal” decisions, there’s no reason to believe that the government’s induced sale of the asset is of greater national benefit. Rather than selling, retaining and nurturing the enterprise may have been of equal or greater national benefit. Thus we are depriving ourselves of federal revenues to accomplish what may as likely as not be to our nation’s best net interests.

Respectfully, Supposn

[Supposn]

Originally Posted by Supposn: On the contrary if you share my confidence in the concept of consistently equitably open competitive markets providing “level playing fields”, you too would likewise be opposing favorable tax treatment of CGs. Our government should not be choosing winners and losers.


I completely agree with that last part but all of your assumptions leading up to that point are false.

You are not a proponent of consistently equitably open competitive markets providing “level playing fields?

Respectfully, Supposn

[fj1200]

Am I to believe that you’ve found something that I’ve written somewhere at sometime that you’re able to take out of context in order to falsely demonstrate that I’ve equated “investment” and “speculation” or you haven’t yet been able to do so?

It was all taken within context. I don't need to reiterate my point; we can move on.

[fj1200]

Originally Posted by Supposn: I’m generally opposed to government’s policies favoring any particular class of incomes or taxpayers. Such policies are generally not a net benefit (but rather a detriment) to our economy.

The description within IRS regulations is “long term capital gains INCOME”; income is income.

Good for you. You refuse to accept the truth that a lower CG rate is beneficial to all.


What did you mean by ‘‘and given that investment gains were already taxed previously”? Capital gains are realized due to the sale or trade of an asset. How many times can you resell the same asset without first recovering the asset?

Money for investment is already taxed at the income level. So you're "class" is one that is subject to double taxation. I would think you'd be opposed to that sort of "unfairness."


Acorn’s contention is nonsense. Capital gains are “one shot” gains.

BS. Gains are reinvested for "multiple shots."


Within transactions where the favorable tax treatment was not a primary factor of the decision to sell an asset held for a year or more, the sale would have been consummated if the lower tax rate had not been granted. Thus in those cases the only accomplisments due to the discounted tax rate was less than otherwise federal revenues and greater burdens shifted upon all other then current and/or future tax payers.

It is only within transactions where the determination to sell such assets were in doubt and a primary factor of the decision to sell was due to the favorable tax treatment, that those aggregate decisions’ national benefits are in doubt.

You've just pointed out the folly of your own argument. Investors making decisions that are not in their own best interest and hence not in the countries best interest. A lower CG tax encourages investors to sell assets that can be reinvested into other enterprises, jobs are created which is in our best interest. You're contention is otherwise?


Within those transactions where tax policy tipped the scales of decisions, government’s tax policy is a primary determining factor. Within these “marginal” decisions, there’s no reason to believe that the government’s induced sale of the asset is of greater national benefit. Rather than selling, retaining and nurturing the enterprise may have been of equal or greater national benefit. Thus we are depriving ourselves of federal revenues to accomplish what may as likely as not be to our nation’s best net interests.

You ignore evidence to support your own bias.

[fj1200]

You are not a proponent of consistently equitably open competitive markets providing “level playing fields?

I am. As I said, all your assumptions are false.

[Supposn]

Originally Posted by Supposn: Within transactions where the favorable tax treatment was not a primary factor of the decision to sell an asset held for a year or more, the sale would have been consummated if the lower tax rate had not been granted. Thus in those cases the only accomplishments due to the discounted tax rate was less than otherwise federal revenues and greater burdens shifted upon all other than current and/or future tax payers.

It is only within transactions where the determination to sell assets were in doubt and a primary factor of the decision to sell was due to the favorable tax treatment, that those aggregate decisions’ national benefits are in doubt.



You've just pointed out the folly of your own argument. Investors making decisions that are not in their own best interest and hence not in the countries best interest. A lower CG tax encourages investors to sell assets that can be reinvested into other enterprises, jobs are created which is in our best interest. You're contention is otherwise? You ignore evidence to support your own bias.

Fj12200, when the decision to sell an asset is so marginally “thin” that tax treatment is a primary factor of the decision (to sell), the benefits to nation’s economy are not all that’s in doubt; in such instances the sellers themselves are often torn by doubts.

We should not and I do not trouble myself with sellers’ conundrums due sales of long term held assets.

The reduced tax rates for long term capital gain incomes are of advantage to a limited segment of tax payers. (IMO it’s politically unfeasible to eliminate the tax discount for capital gains due to the sales of private residences). If we exclude the sale of private residences it’s (even cumulatively) an extremely smaller segment of taxpayers that benefit due to this tax policy. We should be more concerned about this tax policy’s current and future detrimental affects upon all other taxpayers.

Due to the policy our nation’s net tax revenues over time are less than otherwise and a greater proportion of the nation’s total tax burden is shifted upon taxpayers who do not derive significant portions of their incomes from long term capital gains.

You and I differ upon this point and the evidence that you believe is contrary to my position. By their nature, long term capital gain incomes are one shot incomes. There is no method to “prove” your contention that government revenues are greater than otherwise over the years due to reduced tax rates upon long term capital gains’ incomes. You do not accept what I contend to be a logical conclusion that the policy’s clearly detrimental to our nation’s GDP.

Respectfully, Supposn

[Supposn]

It was all taken within context. I don't need to reiterate my point; we can move on.

Fj1200, you’ve found something that I’ve written somewhere at sometime that you’re able to take out of context in order to falsely demonstrate that I’ve equated “investment” and “speculation”? But you hesitate to post and defend your interpretation of what you believe is such evidence?

Respectfully, Supposn

[Missileman]

Due to the policy our nation’s net tax revenues over time are less than otherwise and a greater proportion of the nation’s total tax burden is shifted upon taxpayers who do not derive significant portions of their incomes from long term capital gains.

This is NOT the fault of those who derive income from CG. A higher tax burden on every taxpayer is CLEARLY and UNDENIABLY the fault of our federal government which is unwilling, and currently unable to stop spending OUR, let me repeat, OUR money.


You and I differ upon this point and the evidence that you believe is contrary to my position. By their nature, long term capital gain incomes are one shot incomes. There is no method to “prove” your contention that government revenues are greater than otherwise over the years due to reduced tax rates upon long term capital gains’ incomes. You do not accept what I contend to be a logical conclusion that the policy’s clearly detrimental to our nation’s GDP.

Respectfully, Supposn

Less spending and less federal government involvement in business is our only hope of an economic recovery, including both taxes and regulation.

[Supposn]

Money for investment is already taxed at the income level. So you're "class" is one that is subject to double taxation. I would think you'd be opposed to that sort of "unfairness".

Fj1200, I agree with Postmodern Prophet that taxing consumption rather than income would be economically superior; (Refer to reply #10). But incomes derived from transfers of funds or from investments are (as they should be under our current tax regulations), subject to income taxes.

If ADDITIONAL incomes are realized from the sale of the income producing enterprises’ entire or partial assets, that’s considered as ADDITIONAL incomes subject to taxation. [To the extent that incomes are derived from the sales of assets held for a year or more, they are subject to a more favorable (than the regular income) tax rate].

I believe that you fully understood all of this when you argued that taxing the profits derived from the sale of an asset was taxing the same income twice.

Respectfully, Supposn

[Supposn]

This is NOT the fault of those who derive income from CG. A higher tax burden on every taxpayer is CLEARLY and UNDENIABLY the fault of our federal government which is unwilling, and currently unable to stop spending OUR, let me repeat, OUR money.

Less spending and less federal government involvement in business is our only hope of an economic recovery, including both taxes and regulation.

Missleman, the topic of this discussion is the reduced tax rate granted to long term capital gains incomes.

The federal government’s distributions of the tax burdens and our disbursements of revenues are separate issues.

Although for many of us, lesser amounts of tax revenues and/or spending would mitigate our criticism of the status quo, these both would still be political issues subject to debates.

Respectfully, Supposn

[Supposn]

Missleman, I advocate eliminating the reduced tax rate granted to long term capital gain incomes.

I contend that by doing so we could reduce the annual federal deficits to some extent or the additional revenues could contribute to compensation for reductions of regular income tax rates that would not cause additionally larger federal deficits.

[I suppose that Fj1200 disagrees with others like myself who believe tax decreases do NOT generally pay for themselves].

The federal deficit slows down our economy and I agree with those contending that the deficits eventually are net detriments to our annual GDPs. I’m supposing Fj1200 and I agree upon this particular contention.

Respectfully, Supposn

[fj1200]

It is only within transactions where the determination to sell assets were in doubt and a primary factor of the decision to sell was due to the favorable tax treatment, that those aggregate decisions’ national benefits are in doubt.

:bangsheadagainstwall: A low CG rate is NOT the ONLY inducement to sell, a high CG rate IS an inducement to NOT sell. The latter is detrimental to national best interest. And you can identify those transactions anyway? :rolleyes:


Fj12200, when the decision to sell an asset is so marginally “thin” that tax treatment is a primary factor of the decision (to sell), the benefits to nation’s economy are not all that’s in doubt; in such instances the sellers themselves are often torn by doubts.

We should not and I do not trouble myself with sellers’ conundrums due sales of long term held assets.

Yet you are advocating a policy that increases those conundrums.


The reduced tax rates for long term capital gain incomes are of advantage to a limited segment of tax payers. (IMO it’s politically unfeasible to eliminate the tax discount for capital gains due to the sales of private residences). If we exclude the sale of private residences it’s (even cumulatively) an extremely smaller segment of taxpayers that benefit due to this tax policy. We should be more concerned about this tax policy’s current and future detrimental affects upon all other taxpayers.

Those "advantages" are available to ALL taxpayers.


Due to the policy our nation’s net tax revenues over time are less than otherwise and a greater proportion of the nation’s total tax burden is shifted upon taxpayers who do not derive significant portions of their incomes from long term capital gains.

Blatantly false. CG rates were lowered in '97 and resulting CG revenues alone more than doubled and that doesn't take into account the increased income tax revenues that came in from the job creation that occurred. Do I need to link to the specifics?


You and I differ upon this point and the evidence that you believe is contrary to my position. By their nature, long term capital gain incomes are one shot incomes. There is no method to “prove” your contention that government revenues are greater than otherwise over the years due to reduced tax rates upon long term capital gains’ incomes. You do not accept what I contend to be a logical conclusion that the policy’s clearly detrimental to our nation’s GDP.

To your limited thinking. Your logic is wrong, you refuse the evidence.

[Missileman]

Missleman, the topic of this discussion is the reduced tax rate granted to long term capital gains incomes.

The federal government’s distributions of the tax burdens and our disbursements of revenues are separate issues.

Although for many of us, lesser amounts of tax revenues and/or spending would mitigate our criticism of the status quo, these both would still be political issues subject to debates.

Respectfully, Supposn

I choose NOT to ignore the impetus for the tax burden...too much federal spending. If you reduce spending, there's no need to raise anyone's taxes.

[fj1200]

Fj1200, you’ve found something that I’ve written somewhere at sometime that you’re able to take out of context in order to falsely demonstrate that I’ve equated “investment” and “speculation”? But you hesitate to post and defend your interpretation of what you believe is such evidence?

I've taken nothing out of context as I've shown in this very thread.

[fj1200]

Fj1200, I agree with Postmodern Prophet that taxing consumption rather than income would be economically superior; (Refer to reply #10). But incomes derived from transfers of funds or from investments are (as they should be under our current tax regulations), subject to income taxes.

Good, you're finally right about something. I suspect that you would identify some inherent "unfairness" if given the time however.


If ADDITIONAL incomes are realized from the sale of the income producing enterprises’ entire or partial assets, that’s considered as ADDITIONAL incomes subject to taxation. [To the extent that incomes are derived from the sales of assets held for a year or more, they are subject to a more favorable (than the regular income) tax rate].

I believe that you fully understood all of this when you argued that taxing the profits derived from the sale of an asset was taxing the same income twice.

Not exactly what I said but then you do have comprehension issues. Also, is not corporate income taxed as well? More double taxation for you to ignore.

[fj1200]

Missleman, I advocate eliminating the reduced tax rate granted to long term capital gain incomes.

I contend that by doing so we could reduce the annual federal deficits to some extent or the additional revenues could contribute to compensation for reductions of regular income tax rates that would not cause additionally larger federal deficits.

Contrary to evidence.


[I suppose that Fj1200 disagrees with others like myself who believe tax decreases do NOT generally pay for themselves].

Depends on the tax, depends on the rate from which it's being cut, depends, depends, depends... Generally I say that the rates are not the determinant of Federal revenues, the primary determinant is GDP as our historical average of revenues to GDP has been about 18.5% postwar. The mix of taxation affects economic growth and I think the income, capital gains, dividends, etc. tax cuts are pretty much played out in terms of overall effect and the primary tax that should be cut/ELIMINATED is the corporate income tax.


The federal deficit slows down our economy and I agree with those contending that the deficits eventually are net detriments to our annual GDPs. I’m supposing Fj1200 and I agree upon this particular contention.

:eek:

[Supposn]

I choose NOT to ignore the impetus for the tax burden...too much federal spending. If you reduce spending, there's no need to raise anyone's taxes.

Missleman, lesser tax rates would mitigate our criticism of tax rates but equitable distribution of the taxes we pay will continue to be a political issue regardless of how little taxes we pay.

Respectfully, Supposn

[Little-Acorn]

Missleman, lesser tax rates would mitigate our criticism of tax rates but equitable distribution of the taxes we pay will continue to be a political issue regardless of how little taxes we pay.


It's not exactly on the subject of the thread, but since you mentioned it....

As long as there are some people who get back more from the government than they pay for, and others who get back less than they pay, you will NEVER arrive at an "equitable distribution of the taxes we pay".

[Supposn]

Originally posted by fj1200, March 20, 08:25 AM: Money for investment is already taxed at the income level. So you're "class" is one that is subject to double taxation. I would think you'd be opposed to that sort of "unfairness".

Originally posted by Supposn, March 21, 09:57 AM: If ADDITIONAL incomes are realized from the sale of the income producing enterprises’ entire or partial assets, that’s considered as ADDITIONAL incomes subject to taxation. [To the extent that incomes are derived from the sales of assets held for a year or more, they are subject to a more favorable (than the regular income) tax rate].

I believe that you fully understood all of this when you argued that taxing the profits derived from the sale of an asset was taxing the same income twice.


........ Not exactly what I said but then you do have comprehension issues. Also, is not corporate income taxed as well? More double taxation for you to ignore.

Fj1200, you ether overestimate your own comprehension or don’t review what you posted.

Capital gains incomes are incomes that have not been previously taxed. You continue stating otherwise but you’ve not been able to provide authoritative information to creditably argue, (much less prove) your contention.

I’m opposed to the reduced income tax rates applied to long term capital gains (upon other than private homes) or applied to dividend incomes. Both incomes are taxed at highly reduced rates that vary from 0 to a 15% maximum.

Regarding your mention of corporations:
I’ve just posted a discussion thread entitled “Dividend incomes’ tax discount is unjustified”.

Within that discussion thread I advocate corporations’ dividends similar to their interest expenditures should be distributions of post-taxed dollars. This would be a reduction of corporations’ taxable incomes.

I advocate (to whatever extent feasible), we replace income taxes with a general consumption tax.
I also advocate to whatever extent we retain any individuals’ income taxes we also retain corporate taxes with similar tax rates. Due to income and corporate tax bases’ differences of scales, it’s less feasible that they be exactly the same rates.

If there were no similar corporate income tax, entrepreneurs would declare smaller incomes as individuals and they would live (very well) upon their corporate incomes.

Respectfully, Supposn

[fj1200]

Originally posted by fj1200, March 20, 08:25 AM: Money for investment is already taxed at the income level. So you're "class" is one that is subject to double taxation. I would think you'd be opposed to that sort of "unfairness".

Originally posted by Supposn, March 21, 09:57 AM: If ADDITIONAL incomes are realized from the sale of the income producing enterprises’ entire or partial assets, that’s considered as ADDITIONAL incomes subject to taxation. [To the extent that incomes are derived from the sales of assets held for a year or more, they are subject to a more favorable (than the regular income) tax rate].

I believe that you fully understood all of this when you argued that taxing the profits derived from the sale of an asset was taxing the same income twice.

Fj1200, you ether overestimate your own comprehension or don’t review what you posted.

No, you approve of double taxation, accept it and move on.


Capital gains incomes are incomes that have not been previously taxed. You continue stating otherwise but you’ve not been able to provide authoritative information to creditably argue, (much less prove) your contention.

How did you earn that income? Was it taxed? Your "yes" responses are validation.


I’m opposed to the reduced income tax rates applied to long term capital gains (upon other than private homes) or applied to dividend incomes. Both incomes are taxed at highly reduced rates that vary from 0 to a 15% maximum.

Yes, yes, as you've mentioned.


Regarding your mention of corporations:
I’ve just posted a discussion thread entitled “Dividend incomes’ tax discount is unjustified”.

Great, we can have the same conversation again?


Within that discussion thread I advocate corporations’ dividends similar to their interest expenditures should be distributions of post-taxed dollars. This would be a reduction of corporations’ taxable incomes.

Interest expense is paid pre-tax, dividends are after-tax.


I advocate (to whatever extent feasible), we replace income taxes with a general consumption tax.
I also advocate to whatever extent we retain any individuals’ income taxes we also retain corporate taxes with similar tax rates. Due to income and corporate tax bases’ differences of scales, it’s less feasible that they be exactly the same rates.

If there were no similar corporate income tax, entrepreneurs would declare smaller incomes as individuals and they would live (very well) upon their corporate incomes.

Corporate income is NOT personal income. A Sub-S is a pass-through entity; according to your "logic" entrepreneurs would already be doing that.

[Supposn]

It's not exactly on the subject of the thread, but since you mentioned it....

As long as there are some people who get back more from the government than they pay for, and others who get back less than they pay, you will NEVER arrive at an "equitable distribution of the taxes we pay".

Little Acorn, government expenditures are off-topic but you could open a new topic. Regarding “negative taxation” we also have to consider the economic costs of not spending for social programs.

Concerning only economic considerations with no regard for social issues and populations’ or social unrest not being conducive to stable government: Poverty, disease, ignorance, safety and health regulations, crime, and many other issues significantly affect nations’ economies:

Specific government expenditures should be judged upon their own merits. Consideration should be given not only to what’s proposed or being spent but also to the alternative costs if we don’t spend.

Respectfully, Supposn

[Supposn]

Originally Posted by Supposn: Capital gains incomes are incomes that have not been previously taxed. You continue stating otherwise but you’ve not been able to provide authoritative information to creditably argue, (much less prove) your contention.


No, you approve of double taxation, accept it and move on.
How did you earn that income? Was it taxed? Your "yes" responses are validation.

If I sell my stock at a net profit I’m realizing a capital gain due to the sale of my asset. How do you conclude that the net capital gain was previously taxed income?

Respectfully, Supposn

[fj1200]

You continue stating otherwise but you’ve not been able to provide authoritative information to creditably argue, (much less prove) your contention.

You didn't answer my questions.