by Respectfully - Supposn

Created on: January 29, 2009   Last Updated: February 19, 2009

It is uneconomical and immoral to grant any income sources more favorable tax consideration than that of wage incomes. Only clear and sufficient national benefits may possibly justify such tax inequities.

The USA grants a favorable tax rate for profits due from sale of assets retained by the taxpayer for a year or more. Long term capital gain's lesser tax rate, (the CG discounted rate) is a tax inequity.

If tax inequities favoring profits are economically beneficial, wouldn't directly favoring investments be more beneficial? Are sales profits due to assets sold within the first year of acquisition or incomes derived from assets retained beyond the first year of lesser national benefit? Why are expectation of profit themselves sufficient motivation; should our government be favoring dubious investments?

All tax inequities shift a greater proportion of burden upon less favored tax payers. Any causes of net revenue decrease must be balanced by net increase of taxes and/or borrowing or by spending reductions. (The CG discount does not reduce federal spending).

In cases where CG discounts were not the determining factor for acceptance of investment risks, this tax policy was advantageous to investors but were of no benefit to the nation. Investor's behavior was not modified but we suffered a tax inequity. The CG discounts were certainly of some detriment to our economy.

In cases where CG discounts were critical to acceptance of investment risks, it was advantageous to some, but not all investors. The CG tax discount enticed some to choose what otherwise were unjustifiable investments. (The questionable CG discount's economic contribution is further decreased due to the policy's tax inequity). In these cases, (if the rational of the CG discount were valid), the tax policy may still have been an aggregate detriment to our economy.

CG discount proponents pay lip service to, (but their position indicates a lack of) confidence with the advantage of free open markets and self determination. CG discount's purpose is to "tilt" investors and managers decisions.

Eliminating tax inequities is generally an economic benefit. Specifically, eliminating the tax rate discount favoring long term capital gains profits would not inhibit justifiable investments. Unjustifiable investments due to government intervention are not to our nation's best interests.

It's advocated that revenue generated by elimination of the CG discount be applied to reduce regular income's tax rates.

[It is politically unfeasible to eliminate the CG discount for profits realized from sales of all residential property acquired by taxpayers prior to enactment of this proposed tax modification. For such cases the CG discount should be grandfathered and possibly limited].

Learn more about this author, Respectfully - Supposn.
Click here to send this author comments or questions.