17 January 2012

Here's an idea on capital gains

There was a time in this country, not so terribly long ago, when so-called capital gains were taxed the same as other income. The world didn't implode. In fact, it was a time of great prosperity, at least some of the time. (And when it wasn't it certainly didn't have anything to do with capital gains taxes).

The rationale for a low rate on capital gains has always struck me is phony and hypocritical. Low taxes on the income (primarily) of the very rich (obviously) mainly benefits the very rich, who don't need any benefits.

But for those who are swayed by the usual Rightist argument that little old ladies who live on investment income would be harmed, here's my retort (both):
  • A cap. Capital gains can be taxed at 15% up to a maximum of (say) $60,000 income; subject to...
  • An aged/disabled qualifier.To qualify for a reduced capital gains rate, (capped or otherwise), you'd have to prove, in the same manner as you have to prove to be eligible for SSI, either age (over 65) or disability (inability to work full time for medical reasons).
I can't think of a sensible rejoinder. These work together: i.e., you don't get capital gains reduction unless aged or disabled, and even if you do qualify, it's limited to $60,000 income (subject to adjustment for COLA or some other formula).

The argument that without capital gains taxed at low rates investors wouldn't "invest in America" is, I believe, provably ridiculous and false; it is merely a propaganda point for advocates of low taxes on the rich.

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