Thanks Ben. Its like you said. - someone having a capital gains tax or estate tax situation should be happy.BenNX74205 wrote:I'm not sure what is so bad about capital gains tax. If you take your money and invest it, and it earns money, then people should be taxed for that. It's like earning a salary--when you make money, it gets taxed. I don't think people are arguing against an income tax.
And the problem of having to pay the capital gains tax when you take the money out for retirement or living or whatever--it's taxed then because it's (1) the easiest way to do it, and (2) it just makes more sense to do it. The other option is to tax the person every year on the small(er) amount. This is much more likely to force someone to liquidate the asset to pay the tax.
And besides, the capital gains tax rate is significantly lower than the income tax rate. I don't see capital gains tax as "double tax"--as was said earlier, only the gain is being taxed.
As for the estate tax, I'm torn because nowadays it is a very small percentage of overall tax revenue. But with the exemptions (currently $2 million/person; up to $3.5 million/person next year, but who knows what it will be come 2011), the estate tax really only affects the extremely wealthy. And really, it's not a tax on death; it's a tax on transfer of wealth--basically everything that is taxed falls into that category.
It's a bit harsh-sounding when it's called the estate tax, but it's really a VERY large gift tax situation. If someone gave all their property away before death, it would be taxed. Even if it was given to relatives.
And transfers at death aren't all bad, either. When assets are transferred at death, the receiver gets a "basis" of the current fair market value of that asset at the time of death. This is opposed to someone who gets a gift "before death," where the "basis" is what the giver paid for the asset when the giver purchased it. So, if your Dad bought Microsoft stock for $1, and gave it to you today, when you sell it your gains would be "A LOT OF MONEY" less the $1 "purchase price." That would mean paying a whole lot of taxes. But if the stock is received through a will or as a result of death, the gains on sale would be much smaller, because the "basis" in the property is much higher than $1 (unless the market really is THAT far down)...
I hope that all made sense.....
For what its worth -Warren Buffet and Bill Gates Sr are among several wealthy businessmen who have spoken in favor of continuing estate tax.
