Russia Getting Rid of Capital Gains Tax
news.bbc.co.uk
news.bbc.co.uk
If you invest in a company and make a capital gain of $100 million, the capital gain is valued at $100m because that's the expected increase in profit take of that company over its lifetime.
That profit will be taxed once through corporation tax, and then a second time through dividends tax. Capital gains tax is a third tax on these profits.
The dividends tax is the same as the capital gains tax in the sense that they are both applied only once at the shareholder level.
so unless i have something wrong, its a double tax. not a triple tax. (corp tax + cap gains or corp tax + dividends)
What I'm pointing out is that this theoretical future $100m in value is being taxed once through capital gains tax for the person that created the value, then a second time via corporation tax when that value manifests itself as a profit, then a third time when someone tries to take that profit as a dividend. And possibly fourth when estate tax is paid. That's a lot of tax.
Income tax taxes every transfer of wealth from one entity to another. That's just the way it works, the government takes a cut of the profit that anyone realizes at every hop.
I can't fathom any reason that income I obtain by betting on Apple should somehow magically be more exempt from taxation than income I obtain by betting on poker, working a dead end finance job, or selling my old crap on eBay, all the money from any of those sources has already been taxed dozens of times.
Since this is all theoretical, wouldn't it make more sense to just stop governments from stealing the wealth of the people through the hidden 'inflation tax?'
You're appealing to emotions, not logic. It's not a good way to make decisions.
Nobody--whether left, right, liberal, or fascist--thinks inflation is a good way to finance government. The only disputes are how to prevent it from doing so, as those in office have constant incentive to favor short-term stimulus over long-term stability, and how to balance such restraints against other goals like preventing deflationary shocks and making monetary inflation reflect growth in the real economy.
Suggesting we stop taxing with inflation instead of minimizing its drawbacks is no more helpful than saying, "We should start preventing murders instead of building prisons," or, "Let's reduce the violence in Afghanistan instead of endangering more of our soldiers."
The short-coming of republican government is the humans entrusted with preserving it will undermine the rule of law in various ways, suggesting this ideal form cannot be achieved.
Modern western representative democracies today face a two-pronged problem. The people have voted themselves an ever-more-generous welfare state and the state bureaucracies, for many complex reasons, have failed in their oversight responsibilities.
The most likely scenario is we muddle through it somehow and life goes on.
If you don't kowtow to the right people, murky authorities seize your business on trumped up tax charges, and anyone who fights dies mysteriously in jail.
http://dealbook.blogs.nytimes.com/2009/11/18/hermitage-capit...
In any case, you are correct, the video was created by the Center for Freedom and Prosperity, and I apologize for the error.
That video was full of stuff complaining that you get taxed on EARNINGS from investments and trying to equate that to being taxed twice on the same principal sum. This is nonsense. You're being taxed for earnings and then earnings made from those earnings. That's two separate sums.
The chap was trying to make out that people were being punished for saving as opposed to spending but failed to consider consumption taxes such as sales tax or VAT (in Europe). You don't get punished for saving, you place your money in the bank and it remains there, no punishment. You do get punished for earnings gained by those savings but that's to be expected because that is technically income.
Edit: Russia does not (at the moment) have CFC laws. It may be time to learn russian...
If you raise my taxes with VAT, I'll notice prices of assorted goods going up slightly, be too lazy to add up the various cost increases. If you raise my income taxes, I'll immediately notice that I'm $2000 poorer than I was before, and maybe I'll vote for the other guy.
I also think that the stealth nature of the tax is the actual reason it is being discussed, but I figured that was getting political, and what I posted was fairly defensible on (relatively) objective grounds.
http://www.marginalrevolution.com/marginalrevolution/2010/02...
Sounds like a sound business plan to me. Where do I sign?
for those of us who plan on holding, lowering capital gains does not help. i have to pay income tax on all my income, like any other working schlub.
(Just kidding. The value gain to existing investments from this new law will only cause a small immediate jump in prices, and the rest will ramp up gradually over the days before the change goes into effect.)