Tex wrote:
I have said this before, but I don't think there should be capital gains tax on any investment income up to the amount that SS income stops being taxed. There is no reason why we shouldn't encourage people to invest for themselves and their own retirement. After that amount, tax investment income as if it were regular income with no tax break for the uber rich.
Tex, the taxation of capital gains at a lower rate has a good justification. If you purchased a capital asset for $1000 twenty-five years ago and sold it today for $2000, you would get dinged for $150 in capital gains tax even though you suffered a real loss of more than half of the purchasing power of the original investment,
Also, if you purchased an asset for $100,000 twenty-five years ago and sold it for $200,000 today, you would be liable for $15,000 in Capital Gains even though you lost purchasing power. BUT, if you had the misfortune to buy, say, GM stock for $100,000 twenty-five years ago and got wiped out by Obama as the stock became worthless, guess what. You would only get to deduct $3,000 per year for 30+ years.
Of course, in the latter cased, you would be able to use the loss against subsequent capital gains.
Unfortunatgely, everything in the tax code has a bit of underlying logic for its existence. Unless we completely get rid of the IRS code and replace it from scratch, everyone will be up in arms.
Indeed, we have become nation of takers, gimme, gimme, gimme.
Just think, today it was announced that there are 44,000,000 million americans on food stamps!!!
All the average American can do is understand the tax code and bend his finances accordingly.
Oldgoat[/b]