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View Diary: Low capital gains tax rate rewards the rich with no discernible benefit to the larger economy (120 comments)

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  •  Uh ... the way it actually works: "they're not" (0+ / 0-)

    taxed, that is.

    There's  already a 1-time exemption from Capital Gains tax on the "sale of a primary residence."

    Now, if we're talking about long term commercial investments in real estate or enterprise ... you've put your finger on exactly why the Austrian School of economics considers Inflation to be the greatest evil afflicting mankind since The Fall.   It's hard to project actual rates of return when the buying power of the currency fluctuates unpredictably.

    •  One-time exemption is inadequate (0+ / 0-)

      The primary residence is the most obvious example of something where there's a time value of money impacted by the LT tax.  In fact it can be too low -- the effective rate on something held through 300% of inflation is higher than on short-term income.  But there are other long-term investments.  Middle-income people hold income property too. I bought a cheap condo when I was in my 20s and held it for over 30 years.  I am no Donald Trump but long-term tax treatment helped, and it allowed me to keep the place on the affordable end of the rental market for years, with a low-income Section 8 tenant.

      •  I guess that's how "class struggle" comes into it (0+ / 0-)

        I'm coming from a significantly Labor-Left  ideology ... even though these days I am ... ... in a very small way ...  an "employer/job creator"

        Wealth is produced by the action of labor on resources.  The role of Capital is to organize and consolidate both labor and resources. Without the brains and brawn of Labor nothing is grown,  nothing is built.  

        Investors  are more socially valuable than Speculators" if only investors initiate new enterprises, speculators parasitize  what Investors have financed and Labor has created.

        But NEITHER Investor or Speculator is (morally?)  entitled to quite the consideration due the "saver" who puts aside a portion of what they earn, so as to survive when they are no longer able to sell their brain or muscle to employers or clients.

        (Naturally, if those without Property are simply fungible and expendable labor units ... the whole argument collapses and we say, like  Alexander Pope:

        Get place and wealth, if possible with grace;
        if not, by any means get wealth and place.
        though I suspect that Pope was being ironic ... not to mention cribbing from some Ancient Roman aphorist.

        So ... disinterestedly considered ...  inflation is one of the many risks an investor runs -- along with fire, flood and Act of Public Enemy.

        Your real estate investment might have lost some or all it's value depending on economic and demographic changes in the surrounding area.  BUT it might have greatly increased in value during the same period -- more than keeping pace with inflation.

        It is ... supposedly ... the acceptance of such risks that entitles the investor and the speculator to the rewards of Ownership, at all.  Or at least, so say the Professors in the Business Schools.

        My question would be, on what basis  are you (or any investor)  entitled to a guarantee that your investment would "only go up, never down" and that the gains would somehow be protected from monetary depreciation -- of which "always up never down" has been more nearly true for the past 400 years or so.

        Perhaps there IS  a question whether the profits of "SMALL"  investors ought to be protected by some Cost of Living/Value of Money  scheme or other ... which in turn begs the question "By WHOM should those profits be guaranteed,  FOR WHOM and TO WHAT DEGREE?"

        But, presumably, that's what "Austrian/Chicago School  Post-Keynesian economic policy is supposed to be doing for ALL members of the Investor Class -- however great or small.

        Raising yet another question:  What makes it proper that investments deserve protection (provided by Banking/Government, whereas wages ought to be determined in an unfettered "free market?"

        (Tentative answer:  "Wealth is to Power as Matter is to Energy, according to Einstein")

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