Capital Gains and Taxes, thoughts and questions.

[frigidmagi]

Capital Gains are defined as "a profit hat results from the sale or exchange of a capital asset that is over it's purchase price." A capital asset is something you own that is worth money. Your house is a capital asset. Your car is a capital asset. Your computer is a capital asset. Etc. So are interestingly enough, stocks in a company. So let's say you buy some stocks at 5$ a pop. 2 years later you sell them for 25$ a pop, you have a capital gain of 20$ per stock. Questions?

Currently you are taxed for any capital gains you make.

Interestingly enough, you are taxed less for these then you are for any real work you've done.

In the US our wage taxes are progressive. The more you earn, the more you owe Uncle Sam percentage wise. A person making 60,000$ has to pay a higher percentage then someone making 10,000$. Generally speaking we all agree this makes more sense then doing it the other way around.

This is the not the case for capital gains.

Those of us making less then 15,000$ a year on capital gains pay about 5%, at the end of this end it will be 0%. So if little Johnny in 2009 makes 14,000$ playing the market, it's all free money. The cap on the taxes you pay is 15% (28% for selling collectivables and running a small business, 35% for a large business. Yes running a small business means you pay more the the average stock holder.)

Now last I checked the majority, the vast, vast majority of the people making more then 15,000$ on capital gains are those who are to use a term from my childhood, filthy stinkin rich.

Why is it they're pay a lower percentage then their *ahem* executive assistances?

So I ask, wouldn't it make more sense for there to be a progressive tax on capital gains? I should note this would be a tax on pure profit, you don't pay taxes for losing money on an investment.

[SirNitram]

Because for several decades, the wealthy have been fighting back with their own specially-molded brand of conservatism: One which espouses 'Supply Side' and 'Trickle Down' economics, theories that hold no more weight and evidence than Etheric Resonance or Morphological Field Mimicry.

The elimination and reduction of the capital gains taxes was part of that 'Lower Taxes' thing the GOP has been running on. The idea, unfounded on anything but good propaganda, is that rich people having more money means they invest it in the economy. This is assuming they don't invest it in Cayman Island accounts. The other half is the laughable assertion if you raise the taxes on the wealthy that they will take their money and go elsewhere. Doesn't work on Capital Gains: They'd have to stop investing in American companies.

It's the same as the Estate Tax, which propagandists tried to get called the Death Tax: It sounds like it'd be great for everyone. Everyone has capital assets! You'll be taxed less! Everyone has an Estate when they die. You don't want that taxed!

Except the Estate Tax only comes into play when the figure is seven digits.

Progressive taxes have been under fire for decades. Apparently, the 1950s, when the rich suffered tax rates well over 50% of their income, were some horror-stricken string of poverty and not an economic and scientific boom period.