If the government takes away the capital gains tax what is to keep people from investing in overseas companies, adding liquidity and capital to them and reaping the reward without any penalty? What makes people think that this will create jobs? It would make no sense to invest in a company in the U.S. with high labor cost when labor is so much cheaper overseas? And since most corporations are multi-national anyway would we not be lining the pockets of the same people that send jobs elsewhere? And since capital gains on investments is in fact income why not tax it as income? All I can see happening is the rich getting richer and the average person having to pay more for the loss of revenue due to no capital gains coming into the government coffers. any thoughts?????
Why should hard-working people have a "penalty" for investing their money in the markets? How will it not create jobs? If I am a business owner, and I put some of my profits in the stock market and make money, I can then sell the stock and reinvest the money into my business in the form of hiring more workers to expand my business. Even if I do not own a business, and I am just a simple wage earner putting money into a mutual fund, this too creates a job because it takes a fund manager to manage the fund (that's pretty self explanatory). Are you kidding me? You answered your own question: Capital gains is the result of an INVESTMENT, not income/wage. These are two vastly different things. If I know I go to work and earn X dollars per hour, and I work 40 hours per week, I will gross 40X dollars per week. There is a consistency here without any variation or risk. If I invest Y dollars into the market, there is LOTS of variation, and there is the risk that I may not make any money or even lose money on my investment. I personally do not think capital gains should be taxed at all (at least long term capital gains). Why wouldn't the "average person" also be getting richer along with the "rich person?" Capital gains taxes are not determined by net worth. If capital gains taxes are lowered (or eliminated), then the "average person" too would see an increase in his wealth. Lastly ,your statement regarding the "average person" having to "pay more for the loss of revenue due to no capital gains coming into the government coffers" makes no logical sense. Why and how would this happen?
It's not "hard-working" to sit on ones butt and watch the money roll in. Hard-working is doing actual labor. And that is taxed at a higher percentage. Capital gains are income and should be taxed as such. Why not tax this the same as other forms of gambling?
I never understood why wages are taxed at a much higher rate than capital gains from investments. This is completely backwards. But then I remembered that the rich are the ones who make the laws.
Many times the "income" from capital gains aren't income, but are really just avoided losses. If you put a dollar in a savings account for a year, you will get about a penny in interest. That $1.01 is at that point actually only worth what $0.97 was worth at the start of the year. So the penny interest was still a three cent loss due to inflation.
It's a giant race to the bottom for you boys, ain't it? How about we make it so that if you invest overseas, you go live overseas?
Amen to that. Now the rich are taking the savings from the capital gains rates and investing them overseas. Lord I hate globalism.
When you work for a living, you prifit from your work, and that profit should be taxed where you spend it or where you earn it (but not both). However, capital gains are MUCH more important than your work, they are your future. Nobody should work till the day he dies, and only capital gains can save you here. Paying capital gains taxes is the same as robbing yourself off your own future. How can that be good then if not a zero tax?
If capital gains were evenly distributed across the population a lower tax might make sense. But as long as capital gains are going mostly to a small percentage of the people the lower tax is really a form of welfare for the rich. The majority of folks who own stock do so in IRA's and 401K's and pay the regular income tax rate when they withdraw their capital gains. Only the investor class benefits from this tax break.
Most careers have 401K accounts for retirement plans. Everyone who takes distributions from those accounts is subject to capital gains taxes. That is one of the reasons why this tax applies primarily to a small portion of the population - those are the ones who have already retired. The rest of us will one day be subject to this tax when we start living off our retirement savings.
So you're saying the top 1% are being robbed and have to work until they die because of a capital gains tax. Do you really believe this nonsense? Here's a concept: tax high income earners at a high rate irrespective of captial gains or ordinary income (since the superwealthy can't possibly spend all their wealth they of course have large longterm investments). And tax peole who make less money at lower rates, with favorable cap gains rates for them, to encourage investment.
Actually, I want to make capital gains as untaxable as social security is defined to be. Because captal gain is an earning used in the future, but ordinary income is used in the present. No. A lot more Americans who are not investors work internationally, at foreign employers, outside the US. Capital gains taxation literally robs them off their retirements, because most foreign retirement schemes don't qualify in the US, even if they are exactly like a 401k/IRA. This is one of the bigger resons why capital gains should be cathegorically abolished. And in this modern globalized world, even more American workers will end up working abroad, capital gains taxation hurts a lot more than just the professional investors. You are a victim of propaganda, that top 1% is in reality the top 25 % or so, and it can easily include you if you work in an office in a globalized corporation/industry. Your taxation proposal sounds good, but I would like to modify the cap gains part of it to have a zero band to cover any investment with volumes similar to 401k/IRA accounts, regardless of ordinary income. A general issue with American laws is that when they are legislated to "punish the rich", they eventually reform to punish the poor, and when they are legislated to "protect the poor", they eventually reform to protect the rich.
A capital gain is income...it is money coming in....income. I see a reverse Robin Hood...steal from the poor to give to the rich. The whole time I hear that the POOR are not paying their fair share.
Did that investment money just fall out of the sky?! Of course not: Someone worked (*)(*)(*)(*) hard to earn it, and they were ALREADY taxed on the income. Please remove the massive chip on your shoulder. Do you put your retirement savings in a mattress? Do you expect hardworking people to work until the day that they die? Why not let honest people keep the money that they worked and sacrifced for? They were already taxed on their income, so just allow them to invest their money and enjoy the investment in their twilight years. Is that really too much to ask for? Capital gains are not income. If they were, then the goverment would give people insurance on investment losses, as they do with unemployment insurance. Because long-term investing is not gambling. There has never been ONE form of investment (stocks (in a diversified portfolio), bonds, precious metals, etc) that have decreased in value in the long term.
A capital gain is not income. A capital gain, by definition, is the increase in the value of a capital asset (a.k.a. investment) that gives it a higher worth than the purchase price. Income, in reference to the "income tax," is defined as the amount of money or its equivalent received during a period of time in exchange for labor or services. LOL! Explain this one to me. If a hardworking guy invests money into a mutual fund and makes a profit on his initial investment, how exactly is he "stealing from the poor?" They aren't
No one can tell me for sure if the dow will ever return to 14,000. You just can't do it. And if it does will inflation eliminate the gain because of lost buying power? You need to go to a local thrift store and pick up some older books on investing...many stocks have not returned to the prices they were selling at years ago....right off the top of my head...GE. And since no one "has a crystal ball" investing is...in fact...gambling. There are ways to "minimize risk"....just as there are ways to minimize risk in gambling.
The elimination of capital gains tax will steal from the poor in this way.... The loss of revenue will have to be replaced. It will be replaced by a reduction in social programs (a debate in itself) or an increase in taxes on those least able to pay.
In 1981 GE traded for about $1 a share. Today it trades at $16. Plus it split five times since then. If you had one $1 share of GE in 1981, you would 48 shares worth $16 each today - a total profit of $767.
One stock??????? My IRA lost $7000 this year. It is now way below what it was in 2000 and when I withdraw some cash I'll be taxed at the regular rate. The government gives me no tax break for losses. That is the way it works for the non-investor class. The elimination of capital gains tax is another attempt to coddle the rich. That's how it is. Period.
I was simply invalidating his claim that GE was trading lower than it was 30 years ago. How is your account below its 2000 levels? Mine is far higher, in fact it is far higher than it was in 2008 before the market tanked. Did you switch from stocks to bonds right after the market fall?
It sold for over 35.00 (I think about 37.00 average) in 2006 with a .25 cent dividend. If you bought in then you would have lost about half the investment. And if you cashed in a retirement account early you would have paid income taxes on the account plus a 10% penalty. If you owned the stock outright...not in a retirement account ...you could have written off the loss.