Posted on 11/29/2017 8:03:30 AM PST by SeekAndFind
One of the best things that President George W. Bush accomplished in his eight years in office was a reduction in the capital gains tax. The capital gains tax had become a drag on investment, which discouraged people from putting their idle money to good use.
Bush’s reduction in capital gains wasn’t just a cut, but effectively a genuine improvement in how we tax. The changes became incentives, which mobilized dormant or idle capital. More money was made available in the economy in the form of long-term investments. In short, it brought productive and willing capital for growth.
Even with the Obama Administration and the Democratic Congress’s aggressive high tax and redistributive policies, they did not push rates back to the pre-Bush reductions. Openly, the left was afraid that aggressive tax hikes would backfire and negatively impact the anemic growth experienced during the last administration.
Reasonable Democrats and Republicans readily admit that it doesn’t make sense to tax capital gains like we do incomes. Fiscal and tax policy experts understand idle money should be invested or it will sit on the sidelines. With the right type of incentives, idle capital will continue to be deployed for growth. Putting money to work puts people to work.
Even considering the contrasting data between the pre-Bush tax policies and the Bush capital gains reform, there are some who are either close to or within the Trump Administration and Congress that are seriously considering doing away with the carried interest tax rate. Abandoning the carried interest tax rate would have profoundly negative implications and would slow long-term investment in our nation’s growth.
(Excerpt) Read more at spectator.org ...
All assets need to have their basis adjusted for year by year inflation during the period held.
Many managers of investment funds do not draw a salary. Instead, they take their compensation from the fund’s fees and profits. If profits are achieved by means of long-held assets, in which performance has zero guarantee that profits will be accomplished, then capital gains tax is the appropriate way to tax managers.
There isn't any other industry where this kind of arrangement would pass muster with the IRS. I own a small professional services firm. If I set myself up as a corporation, paid myself $0 in salary, and reported all of my income as "dividends" and "capital gains," the IRS would be all over my ass and they'd be assessing me taxes and penalties on imputed income from my operations.
That’s a good point, but this article is about a very different aspect of capital gains taxation.
Calling BS on that. The only impact is for Stanford, CT hedge fund managers to pay the same rate as the resat of us.
Who’s promoting a capital gains tax HIKE?
The high capital gains tax rate is holding back investment in the stock market, clearly. No one will buy equities these days, the market is flat, what a terrible circumstance.
Bush did a hell of a lot more than just cut cap gain taxes. He dramatically increased the unified credit and had dividend taxation reduced from ordinary income levels to 15% or less.
He was also the first President in modern history to take the American fist and punch the crap out of our evil enemies.
GW doesn’t get enough credit for all the shit that is slung his way.
Carried interest absolutely should be taxed as ordinary income at the time granted. It’s nuts that this has persisted so long.
If a friend of mine offers me a 20% stake in a commercial property for any reason, you can be damn sure it is taxed as income. The IRS has standards and protocols in place to estimate the value of that "income" on the day I sign the paperwork to become a partner in the operation.
The FY2009 Federal budget submitted by George W. Bush was $3.5 trillion.
GWB's legacy will be an 84% increase in Federal spending in just eight years. None of what he did on the tax/revenue side can overcome such an awful, irresponsible track record. He makes Barack Obama -- whose last Federal budget was for $4.2 trillion -- look fiscally responsible by comparison. That itself speaks volumes of how bad the second Bush administration was.
It also explains why Jeb Bush ended up being less popular than ISIS among Republican votes in 2016.
That is what happens when you lower taxes for the very rich. The less they pay the more they are going to spend. Just like the lower 47% not paying taxes and then not caring about high spending. The very rich care less the less they are taxed and don't forget the government at all levels are about 35% of the economic pie. Maney of them are receiving more from the government in subsidies, contracts and what ever then they are paying. .
The carried interest idea really took hold with the old “Venture Capital” industry. Because the shares of early stage startups were difficult to value with precision (no liquid market, often no comparables) the managers who received additional shares in the pools of investment, rather than receiving cash, were able A. to defer taxation on the carried interest until their own liquidity event and B. to have those monies all taxed at the capital gains rate rather than the ordinary income rate even at the time the investment was sold.
Today when Hedge Funds are often invested in liquid securities, the argument that the assets are difficult to evaluate and that liquidity is hard to come by are obviously specious. Same really for most of the “Private Equity” business, which is now really more about LBO investing and less about start-up venture capital. Why, for example, Mitt Romney’s hundreds of millions of income from a successful private equity career should get a preferential capital gains rate when a lot of that income was compensation for being the manager of the fund escapes me logically.
Taxes make some hobos do what they do is the fight worth it all your life and you can’t leave what you earned to your kids.
That’s a good point. The U.S. government is basically the largest “customer” for more and more industries in this country.
I have always believed that capital gains tax rates should be lower than income tax rates, for the simple reason that someone with $100 million in his pocket should have an incentive to invest it in a productive industry rather than buying U.S. Treasury bills. But once you're at the point where these investors are simply looking for loopholes to convert income to capital gains, I think the whole idea has sort of run its course.
I give GWB credit for advancing his father’s plan to turn the USA into North Mexico.
His refusal to enforce the laws and borders is costing US our country.
No one will buy equities these days, the market is flat,
The thing I don’t understand is why the Democrats don’t even want to let their own voters to keep more of their own money. Is it somekind of envy thing?
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