Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Politics : Formerly About Advanced Micro Devices -- Ignore unavailable to you. Want to Upgrade?

To: combjelly who wrote (800251)	8/7/2014 5:32:07 PM
From: i-node	Respond to of 1583505

>> Good point. I did have that wrong. The high was in 1978 at almost 40%. And you will, no doubt, recall how great the economy was at that time. Capital gains generally have to be taxed at lower rates when ordinary income is taxed progressively; otherwise, you get unfair and some seriously convoluted outcomes that are simply unfair. That's why we have almost always had some kind of beneficial treatment of capital gains; it almost never makes sense to tax capital gains at the higher rates of ordinary income. Because capital gains are about appreciation of property over an extended period of time, usually extending over more than a single tax year. Ordinary income is taxed by year. If you want to have perfectly flat rates (or almost so, as with TRA86) then it is different. So, if you had a consistently low rate for capital gains or ordinary income, then you could tax them the same. The problem with taxing capital gains at ordinary income rates can be mitigated somewhat by "income averaging", which was also removed in the 80s under Reagan. >> I think it was pretty clear I was talking about capital gains on stocks. Capital gains are much bigger than stocks. If I buy real estate for $6,000 and sell it for $100,000, that's capital gain. If I sell my home, a rental property, or property used in a trade or business, it is capital gain. If I sell property (e.g., oil and gas interests or timber) I inherited, capital gain. A partnership interest, or a business, capital assets. So, it isn't just about stocks. Even a car that for some reason I sold at a profit, or a cow if it isn't stock in trade, capital gains. Or that Steinway 11' grand piano I bought for cheap. Even inventory can be capital gains in bulk sales. If you're talking about just stocks, that's a different thing. If you're conflating capital gains with unearned income, that makes a big difference because they're two entirely different things with pretty much no overlap (other than in some computational side effects).