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View Diary: Entitlement Reform Everyone Can Support (104 comments)

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  •  I think the income cap on Medicare was (18+ / 0-)

    eliminated in 1993 with Clinton's first budget. But yes, raising or eliminating that same cap for the SS tax is the way to preserve its long-term solvency, not chained CPI.

    I'm also all for eliminating the capital gains tax and taxing all capital gains as part of ordinary income whether it be for an individual or a business.

    Another thing that the left and right can agree on is the idea that Congress will NEVER write a sensible tax code. Sigh.

    •  Yes, there is no income cap for (3+ / 0-)
      Recommended by:
      JesseCW, bunnygirl60, JeffW
      I think the income cap on Medicare was eliminated in 1993 with Clinton's first budget.
      the Medicare tax.  
      I'm also all for eliminating the capital gains tax and taxing all capital gains as part of ordinary income whether it be for an individual or a business.
      The justification for the lower capital gains rate was explained to me as, "Part of long-term capital gains is the result of inflation pushing the price up."  I might be able to see a slightly lower rate, but the large difference currently in effect isn't reasonable.  And the "carried interest" rule is grossly unfair; "carried interest" is really salary and should be taxed at ordinary rates.  

      Renewable energy brings national global security.     

      by Calamity Jean on Tue Jan 08, 2013 at 02:39:10 AM PST

      [ Parent ]

      •  That's no reason to lower capital gains taxes, (2+ / 0-)
        Recommended by:
        J M F, bunnygirl60

        it's a great reason to index capital gains for inflation.

        Two different things.

        "Furthermore, if you think this would be the very very last cut ever if we let it happen, you are a very confused little rabbit." cai

        by JesseCW on Tue Jan 08, 2013 at 03:54:37 AM PST

        [ Parent ]

        •  Gains, but not losses, and inflation only (1+ / 0-)
          Recommended by:
          bunnygirl60

          Indexing capital gains for inflation makes sense.  But I don't think losses should be indexed, and I don't think that gains less than inflation should be transformed into losses.  And the indexing should be one way only (no indexing for deflation).

          Example: you buy an asset for $100 in 2013, and in 2023 sell it.  Assume that the CPI in 2023 is 150 with a baseline of 100 in 2013.

          - If you sell the asset for more than $150, you pay tax (at regular rates) for the sale price - $150.

          - If you sell the asset for at least $100 and at most $150, you have a net gain of zero.

          - If you sell the asset for less than $100, you have a loss of $100 - the sale price.

          If there's deflation between now and then, so that the CPI in 2023 is 90, then the gain/loss is simply the difference between the sale price and $100.  You shouldn't pay tax on something you sold for no nominal gain when you wouldn't on just holding cash through the period.

          Inflation is simply calculated as the CPI ratio -- no year over year calculation.  Also, the CPI used for this calculation must be the same as the CPI used for indexing other federal benefits, like Social Security (no CPI for capital gains and chained CPI for Social Security).

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