Encouraging investments is not a bad idea. Of course, it's possible to be too pro-investment, but a 25% flat rate on investment based income is not too low, but not too high. It's slightly lower than wage income as an incentive for people to save and invest.
How does that justify taxing work more than capital? For people with high salary, any extra income (from work) is taxed almost 2x that of capital gains.
Also, only a small % of investment actually goes funding productivity. Most is just rich people's money changing hands, base only on speculation with zero regards for impact on businesses/society.
>a 25% flat rate on investment based income is not too low, but not too high
Do you have a study on this, or is this your opinion?
it is an opinion. The policy setting is not a fact based research, but ideologically based opinion. i would argue that any research is basically paid opinion pieces to try and convince someone on the fence.
> How does that justify taxing work more than capital?
the justification is in my comment above - it is taxed less than wage income to encourage people to spend their money investing, rather than spending it in consumption.
no investment has zero risk.
in any case, the 90% tax would discourage the investment for some people - because that investment might not return enough to be worth the opportunity cost of consumption instead. The point is, more investments means more possible productivity in the future, and any consumption->investment switch is good.
This is the same calculus as wage tax of course, but since most people don't have a choice but to work for a wage, they don't need to be incentivized to work by lower taxes.
Not always: It is possible to over-invest and under-consume. Don't forget that the purpose of investment in the present is to enable consumption in the future. In the extreme case, a society which only invested and never consumed would starve to death. There is a natural balance point, and moving away from that point in either direction results in a less efficient allocation of resources.
certainly is, but i would argue that more people under-invest and over-consume! I would also argue that the minimal amount of consumption (let's say, you keep yourself alive, just barely), and maximizing your investment amount, is the best outcome for your future, and is the most efficient allocation of resources.
If you always prioritize your future over your present then your sacrifices are wasted—you live your entire life just barely keeping yourself alive and never claim any of the proceeds from your investments for yourself. As I said before, there needs to be a balance. Investment is pointless and wasteful without a plan to eventually consume more than you could have without investing.
Did you mean speculating? A few % of so-called investors are actually supporting new businesses. I believe it's obvious when you think about investing in crypto.
In australia, there's franked dividends, which basically passes the tax credits down to shareholders (effectively, companies pay a 30% tax, but give that same dollar amount as credits to shareholders, who can then use it as tax paid in lieu). See https://www.investopedia.com/terms/f/frankeddividend.asp
If you have a company or are a solo entrepreneur you can also reduce your profits by expensing things via the company (tech, cars, etc.) or investing further.
If you are running a GmbH or UG or GbR things might be different, but then why don’t you keep assets inside of the entity? Then the entity could grow its assets and you could only take what you need and save some assets for the future. (Assuming you make more than what you need to maintain your lifestyle)
Edit: Corporate tax in Germany consists of two parts, Gewerbesteuer and Körperschaftssteuer. Those vary depending on where you are incorporated in Germany (Hebesatz), but 30% is a good rough estimate.
It definitely is if theres a glut of capital.
Which there is and has been for at least a decade.
Besides, what are the wealthy going to do with their excess wealth except invest it?
But a concern is that those with savings might move money out of the country to invest in jurisdictions with lower capital gains tax.
One view is that this tax jurisdiction forum-shopping creates a race to the bottom.
As opposed to working, which is how productivity actually happens.