Friday, May 24, 2013

A thought about taxes

Mike Burns shared this interesting article with the following graph:

The 15 percent tax on long term capital gains has been the subject of a lot of attention. There is some justification. If you hold a stock for some years, inflation has taken place. Part of the profit from the sale is not really profit, but simply the increase in price necessary that you can buy as much now as you could have in the past before that inflation took place. Still it would be possible to make the tax on capital gains more equitable.

A problem is that rich people get richer by the appreciation of things that they own but never sell. They never take the profits as "income". If a billionaire sees his stock portfolio appreciate by $100 million in a year but doesn't sell any of the stock to take the profits, then s/he pays no tax at all on the increase in wealth. Not fair!

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