Because by holding you lose the use of your money for 10 years and lose value to inflation.
If we are going to tax capital gains, why tax them only when sold? If two people hold the same equity position for 10 years and each makes $1 million in capital gains, why punish the investor who wants to sell and buy something else (good for the economy) and reward the holder who doesn't sell, and, well, doesn't do anything at all (doesn't seem too good for the economy)? If you buy a house, you can live there, save on rent and if it goes up in value, pay capital gains on the increase when you sell it. You may have a property tax, but in CA, that is based on the price you buy it and for cars, it depreciates quickly. For businesses that you buy via stock investment, it is complex but they too can depreciate their buildings and equipment but they pay property taxes on this every year.
I'd prefer we index capital gains to inflation then pay normal income tax on the gains above inflation if held for 3 years or longer.
I am NOT a fan of the feds taxing property like we do in Taxifornia... most of it was voted in by people who want government pensions or government contracts which is a large part of the CA budget. |
