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Supposn
06-06-2013, 10:24 AM
Tax reductions due to capital gains and the less renowned income averaging:
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Federal tax policy currently decrees that the profit due the sale of an asset held for 12 months or more prior to the sale, (rather than incomes derived from any other sources or methods) are worthy of generously reduced income tax rates. To a significant extent it induces activity that more favors creation of LTCG rather than other forms of income profits.
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There's no reason to believe that that the aggregate consequences of this tax policy are in our nation’s better interest. On the contrary within this issue there doesn’t seem to be any compelling public interest that would justify replacing administers and entrepreneurs determinations with a tax regulation favoring only LTCG incomes.
Those who strive and reinvest into their enterprises certainly do not contribute less to our economy.
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I advocate retainng the LTCG tax reduction for the sale of taxpayer's homes. Otherwise LTCG extremely lesser than regular incomes’ tax rates provide no net benefit to our nation but only serves to reduce our tax revenues, increasing both our federal budget deficits and the inequity of our tax system.</SPAN>
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The IRS tax option of income averaging was once available to all taxpayers that experienced ANY financial boon.</SPAN>

Income averaging enabled a taxpayer to divide their taxable income over a 3 year duration and pay taxes based upon those updated annual taxable incomes. Income averaging mitigated the higher tax due to progressive income tax rates. I believe it’s still an option available only to agriculture, ranching or fishing enterprises. It’s an advantage to those with erratic annual taxable incomes.</SPAN>

It’s been many years since I had used it. I think it required the taxpayer’s net income for the last tax year be 20% greater than that of the previous tax year and some specific foreign incomes were not averaged out.
Except for that exclusion, the government made no other determination as to what source of income should be favored. The income averaging form did fully consider regulations or tax rate differences that may have changed during the years of incomes being averaged. </SPAN>

Unlike the tax reduction for long term capital gains, income averaging equally treated lottery winners, speculators, investors and home sellers. Government did not determine winners and losers.

I advocate that income averaging should be fully reinstated and replace the favorable treatment of long term capital gains. I would not be adverse to it being extended to average out 5 rather than the 3 years.</SPAN>

Respectfully, Supposn