The capital gains tax discount is unjustified.

Discussion in 'Economy' started by Supposn, Jul 26, 2010.

  1. Supposn
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    Supposn Senior Member

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    A significant and clear benefit to our economy MIGHT possibly justify additional federal intervention within our free enterprise system.

    This tax reduction is granted to incomes and rather than to investments or savings. It does not clearly induce investment or savings to be greater than otherwise.
    If the reduced tax rate was the determining factor as to where and how savings or investments were allocated, there’s no reason to suppose that tax treatment favoring capital gains induced superior economic decisions.

    The concept of the free enterprise market is investors’ choices dependent upon their determining the probability and rewards for success. What if tax treatment favoring capital gains actually affects savings and investments by affecting the value of probable rewards?

    If government’s tax policy is able to entice more investment in some classification of enterprises, it’s logical to believe that less favored enterprises will have more difficulty to attract investment capital. If that’s the case, government would be replacing Adam Smith’s unseen clever hand with the government’s clumsy claw. That’s completely contrary to the concept of free enterprise and the wisdom of the market.

    When the determining factor that induced a sale is the tax policy, the question of a sale’s benefit to our nation’s economy is questionable. When such marginal determinations involve selling a whole or major portion of an enterprise or the breaking up of the enterprise, (because it’s a marginal determination) the retaining, improving and re-investing into the enterprise may be of equal or greater benefit to our nation.

    In cases where the determining factor to sell was not due to tax policy, the sale would have been transacted regardless of tax policy. Profits due to transfers of wealth in themselves are of no greater or less than any other income sources economic benefit to our nation; income is income.

    The tax reduction favoring capital gains profits is unjustified.

    Respectfully, Supposn
     

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