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View Diary: The Lie Behind Capital Gains Tax Rates (41 comments)

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  •  Your statement contains the fallacy. (1+ / 0-)
    Recommended by:
    "No one ever walked away from a good investment because the tax rate was too high"
    But what if the high tax rate turns it into a bad investment?

    Buffet (mostly) correct if he is talking about paper investments. Investors must invest in something. They will not sit on money just because of a CG tax.

    But please re-read my post. When it comes to making a real investment in a physical house (or factory or software, etc), I am risking days and weeks of labor. I am taking the financial risk that the house will be vandalized, full of mold, require lead/asbestos abatement, have unknown foundation damage, etc.

    I am risking something. CG taxes reduce my return. If the return goes below a certain number, it is no longer worth the risk to do the deal.

    I don't want to talk myself onto the wrong side of the argument here. I am in favor of raising CG rates. I just think we need to recognize that higher CG rates will reduce private sector investment.

    When we don't acknowledge this fact, it makes us look like we don't understand Economics -- and this makes everything else we say less credible.

    •  Why invest in a US factory? (0+ / 0-)

      in the current tax environment and at these levels of demand?

      Tax policy disincentivizes domestic investment.

      I would suggest commodities and futures, that sort of thing.

      FDR 9-23-33, "If we cannot do this one way, we will do it another way. But do it we will.

      by Roger Fox on Tue Sep 25, 2012 at 08:25:16 AM PDT

      [ Parent ]

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