What is unjust is that a guy who pays all his taxes on his earnings and has a little left over to invest pays ANYTHING on the earnings from investments he could only make after HAVING PAID INCOME TAXES ALREADY.
What about an investment that goes up say 3% per year. Must he pay taxes on that when he sells, even though inflation ate up all those gains? Yes, he must pay taxes on inflation, even though he is not better off. Is that "just?"
Then he gets to pay again when he's dead. And the companies in which he invests pay taxes on their income.
How many layers of taxation are you in favor of? Three? Four? Five?
The economically correct tax rate on capital gains is ZERO. Ask among economists. That will both maximize growth, and maximize revenue to the Treasury, because rampant investments cause employment, productivity growth, income growth and income tax growth. Capital gains taxes just get in the way of that virtuous cycle.
“How many layers of taxation are you in favor of? Three? Four? Five?”
From a philosophical point of view, I disagree with the income tax in it’s entirety. But the political reality is that we’re stuck with the income tax. If you take the income tax as a given, then the question becomes who are you going to tax? That’s a values driven discussion. In my view, the Joe who earns $75,000 a year should not be paying a marginal income tax rate on his earnings that is roughly double that which someone who is earning their income from capital gains.
Inflation is a red herring since both wages and capital gains are impacted.
The economically correct tax rate on capital gains is ZERO.
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Romney proposes a zero tax rate on any money gained through savings: interest, cap gains or dividends for tax-filers with earned income under %200000. That would do a lot to encourage all workers to save, aka invest, for their own future.