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Old 07-02-2014, 04:36 AM
 
1,025 posts, read 559,196 times
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Tax reductions due to capital gains and the less renowned income averaging.

Federal tax policy currently decrees that the profit due the sale of an asset held for 12 months or more prior to the sale, (rather than incomes derived from any other sources or methods) are worthy of generously reduced income tax rates. To a significant extent it induces activity that more favors creation of LTCG rather than other forms of income profits.

There's no reason to believe that that the aggregate consequences of this tax policy are in our nationís better interest. On the contrary within this issue there doesnít seem to be any compelling public interest that would justify replacing administers and entrepreneurs determinations with a tax regulation favoring only LTCG incomes.
Those who strive and reinvest into their enterprises certainly do not contribute less to our economy.

I advocate retaining the LTCG tax reduction for the sale of residences owned by the taxpayers and were for the year prior to the date of title transfer the primary residence of close relatives to the taxpayers. The amount of individual taxpayerís LTCG sheltered from taxes should be capped at the prior yearís average home saleís amount. It would be politically unfeasible to eliminate this or some similar tax evasion for private residencesí sales.
LTCG extremely lesser than regular incomesí tax rates provide no net benefit to our nation but only serves to reduce our tax revenues, increasing both our federal budget deficits and the inequity of our tax system.
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The IRS tax option of income averaging was once available to all taxpayers that experienced ANY financial boon.

Income averaging enabled a taxpayer to divide their taxable income over a three year duration and pay taxes based upon those updated annual taxable incomes. Income averaging mitigated the higher tax due to progressive income tax rates. I believe itís still an option available only to agriculture, ranching or fishing enterprises. Itís an advantage to those with erratic annual taxable incomes.

Itís been many years since I had used when preparing a tax return. I think it then required the taxpayerís net income for the last tax year be 20% greater than that of the previous tax year and some specific foreign incomes were not averaged out.
Except for that exclusion, the government made no other determination as to what source of income should be favored. The income averaging form did fully consider regulations or tax rate differences that may have changed during the years of incomes being averaged.

Unlike the tax reduction for long term capital gains, income averaging equally treated lottery winners, speculators, investors and home sellers. Government did not determine winners and losers.

I advocate that income averaging should be fully reinstated and replace the favorable treatment of long term capital gains. I would not be adverse to it being extended to average out 5 rather than the 3 years.

Respectfully, Supposn
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Old 07-02-2014, 09:01 AM
 
4,130 posts, read 3,724,723 times
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Isn't this a duplicate thread to what you already started?

Unjustified capital gains tax discount and our prior tax averaging regulations.
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Old 08-17-2017, 02:50 PM
 
1,025 posts, read 559,196 times
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Quote:
Originally Posted by TaxPhd View Post
... Buffet said that he paid a lower rate than his secretary. What he didn't say (but he should have said) was that he, his secretary, and everyone else pays the same rate on the same quantity and type of income.
TaxPhd, obviously everyone hasnít the same opportunities to participate in the same types of investments and avail themselves of the same types and kinds of tax considerations.
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Old 08-17-2017, 02:58 PM
 
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Creating a tax incentive supporting long term investing is a generally beneficial concept to an economy
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Old 08-17-2017, 03:10 PM
 
5,221 posts, read 2,377,031 times
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Quote:
Originally Posted by Supposn View Post
TaxPhd, obviously everyone hasnít the same opportunities to participate in the same types of investments and avail themselves of the same types and kinds of tax considerations.
I'm not sure of the purpose of this post as it neither contradicts nor changes what I said.
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Old 08-17-2017, 06:28 PM
 
1,025 posts, read 559,196 times
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Quote:
Originally Posted by Lowexpectations View Post
Creating a tax incentive supporting long term investing is a generally beneficial concept to an economy
LowExpectations, profits due to the sale of anything owned by the seller for at least the full year prior to the sales transaction are granted extraordinary and unjustified tax reductions for their long term capital gain incomes.

I do not argue that incomes of those who continuously reinvest into and strive to nurture their enterprises are MORE worthy but they are CERTAINLY NOT LESS economically worthy than those who choose to ďtake the money and runĒ.

Income is income; reduced rates for long term capital gains are unjustified. To favor one type or source of income generally entails lesser favor for other types or sources.
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Old 08-17-2017, 06:56 PM
 
17,622 posts, read 12,203,533 times
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Quote:
Originally Posted by Supposn View Post
LowExpectations, profits due to the sale of anything owned by the seller for at least the full year prior to the sales transaction are granted extraordinary and unjustified tax reductions for their long term capital gain incomes.

I do not argue that incomes of those who continuously reinvest into and strive to nurture their enterprises are MORE worthy but they are CERTAINLY NOT LESS economically worthy than those who choose to ďtake the money and runĒ.

Income is income; reduced rates for long term capital gains are unjustified. To favor one type or source of income generally entails lesser favor for other types or sources.
Using tax code to incentivize activity is nothing new and just because you don't believe ltcg should be treated different as income is income doesn't mean there isn't a possible benefit for incentivizing longer term investing behavior
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Old 08-19-2017, 02:55 PM
 
1,025 posts, read 559,196 times
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Quote:
Originally Posted by Lowexpectations View Post
Using tax code to incentivize activity is nothing new and just because you don't believe ltcg should be treated different as income is income doesn't mean there isn't a possible benefit for incentivizing longer term investing behavior
LowExpectations, with few exceptions, the IRS tax option of income averaging was once available to all taxpayers that experienced ANY financial boon. The federal government did not determine which earners of what manner of incomes were deserving or undeserving of this tax consideration. I appreciate such an equitable policy.

I do not argue that incomes of those who continuously reinvest into and strive to nurture their enterprises are MORE worthy, but they're CERTAINLY NOT LESS economically worthy.
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Old 08-20-2017, 05:28 AM
 
1,025 posts, read 559,196 times
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From the topic:
Opinions on recent tax deduction elimination proposal

Quote:
Originally Posted by Troyfan View Post
They should eliminate the capital gains rate, too. Then the hedge fund guys and Warren Buffet would pay much higher rates.

Why should one form of income be given preferential treatment? Doing this would eliminate a lot of Wall St. shenanigans. A lot of dubious corporate practices would disappear too. I believe it would improve corporate governance as well. A shareholder would think much harder about a CEO's claim that he should re-invest the shareholder's profits if the shareholder didn't have the lure of lower taxed capital gains to sway him.
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