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To: DonaldC
I’ve never understood very well why capital gains should be treated differently myself, not that I’m in favor on income taxes generally.

Inflation. If an asset "appreciates" due mostly to inflation of the currency, capital gains taxes are taxing you on the devaluation of your currency, which is also a tax. Hello, double taxation.

7 posted on 10/04/2012 7:40:34 AM PDT by Disambiguator
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To: Disambiguator; DonaldC

There’s also the element of risk.

Income, generally speaking, is pretty risk free - you agree to do x amount of work for an employer, he agrees to pay you y amount of $$ in return. Absent extenuating circumstances, that arrangment will last indefinitely.

Capital gains are the results of investment. While it is possible to gain much, it is also possible to lose the entire investment. Even an investment that doesn’t appreciate or depreciate is essentially a loss when you consider the opportunity costs (could just put it in a savings account, for example).

If taxing capital gains occured at the same rate as income, there would be no incentive to invest because of the risk of losing the investment with no upside when the investment pays off.


9 posted on 10/04/2012 7:59:59 AM PDT by chrisser (Starve the Monkeys!)
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