DontBeStupid
Look it up!
heh heh no.You're missing the double taxation. The value of that stock equals the discounted present value of all of the companys future proceeds. If the company is expected to earn $100,000 a year for the next twenty years, the sales price of the stock will reflect those returns. The gain the seller realizes from the sale of the stock will reflect those future returns, and thus the seller will pay capital gains tax on the future stream of income. But the companys future $100,000 annual returns will also be taxed when they are earned. So the $100,000 in profits is taxed twicewhen the owners sell their shares of stock and when the company actually earns the income.
The company pays taxes on the $100K in the future and you pay taxes on the increase in stock price. No double taxation.
And if they allow a full deduction of capital loss it would create a bias in favour of risk taking. Which would also not be good. You can't have it both ways.Another lovely feature of the cap gains tax is that individuals are permitted to deduct only a portion of the capital losses they incur, whereas they must pay taxes on all of the gains. When taxpayers undertake risky investments, the government taxes fully any gain they realize if the investment has a positive return. But the government allows only partial tax deduction (of up to three thousand dollars per year) if the venture results in a loss. That introduces a bias in the tax code against risk-taking