Capital Gains Tax Inequity???

[PoliticalGab]

Originally Posted by NewToCA

A capital gain is the difference between what you paid for an investment (stocks and stock mutual funds for this discussion) and what you received when you sold that investment. If you made a profit on the investment, then you have a capital gain.

Capital gains from stock or stock mutual funds which have been held at least one year receive favored tax treatment, with a maximum tax rate of 15%, regardless of income. When discussing the tax fairness issues, it is one of the tax issues brought up by those believing the wealthy do not pay enough taxes on their income.

However, with the shift to IRAs and other self funded pension plans, many folks now have substantial stock or stock mutual fund holdings in their personal retirement accounts. When this money is withdrawn, it is treated as ordinary income, with a complete loss of the capital gains tax benefit received outside of retirement accounts.

Assuming the capital gains tax stays as currently structured, is the exclusion of pension profits as capital gains fair, based upon the tax deferred status of pension savings and gains? Would it more equitable to increase the maximum capital gains tax rate, say from the existing 15% to a maximum rate of 20%, and include gains earned in retirement accounts?

Thoughts?

We should get rid of the favored tax for investments held more than a year IMHO. It shouldn't matter how long you keep an investment.

For instance, when the Worldcom debacle was going on, I did some day trading. Obviously holding Worldcom for a year would have been a disaster, lol. What I did was trade hundreds of thousands of shares at a fraction of a penny, several times a day. I made a few thousand for my time, and paid handsomely in taxes for it. Completely unfair. I took huge risks, and the government profited for it more than they would have had I assumed LESS of a risk. That's not right.

As for pensions, same thing. We should level the playing field for all investments.