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Comment by lmm | Hacker News Reader

- Stop giving discounted tax rates for capital gains, make people pay the full income tax rate for any kind of income

- Abolish step-up basis, which allows dynasties to build tax-free wealth via "invest, borrow, die"-type strategies. Also other tax avoidance strategies used by the rich e.g. 503cs.

- Stop giving corporations special treatment under anti-trust law compared to other ways of organising. Give unions, workers' co-operatives, and other such organisations, the same rights to act in an organised way that corporations have. (And, conversely, start paying attention to corporate monopolies rather than using the narrow "consumer harm" standard that's been followed in recent years)

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Why is the solution to "uneven tax structure" always to raise taxes? can we just lower income tax to same as capital taxes instead? Thats real money in your pocket.

Because most of the time when there's an "uneven tax structure" it's because one special interest group got themselves a tax break. Specific penalty taxes are quite rare.

relatively, all payroll taxes are tax penalties, and also income taxes relative to capital taxes

Unlike wages, capital gains can be negative. And generally IRS doesn't compensate for losses, except for minuscule amount. Otherwise imagine Treasury having to refund trillions to Bitcoin bag holders. So lower rate reflects higher risk.

Isn't the risk of losses supposedly why capital holders make a profit at all? So they shouldn't be paid twice for it.

The capital being invested has already been taxed at the source.

Capital gains shouldn’t even be taxed. I earned it, paid taxes on it; what I do with it beyond that is no one’s business. I’m the one taking the risk yet the government benefits if that risk pays off but doesn’t compensate me if it doesn’t.

> The capital being invested has already been taxed at the source.

So? A worker has already paid all kinds of taxes in their life, but they still get taxed on their income.

> Capital gains shouldn’t even be taxed. I earned it, paid taxes on it; what I do with it beyond that is no one’s business.

Your original capital is yours, but if you get income from it, you should be taxed the same as any other income. My time is and should be my own to do with as I see fit, but I still get taxed if I get income from it.

> Your original capital is yours, but if you get income from it, you should be taxed the same as any other income.

capital is what makes future productivity improvements possible. If you took a risk investing your capital, but that return is taxed the same as wage income (which has zero risk associated with it), you would be discouraged from investing that capital, and instead consume more of it (ala, why invest in your business buying plant and equipment, when you could just go on a lavish vacation!).

The low capital tax is to encourage more capital investment, because those with capital has the choice to not invest (and thus society as a whole loses the potential benefits of such investment). People with wage income don't tend to have the option of _not _ working, so lowering their tax won't encourage _more_ wage income.

> capital is what makes future productivity improvements possible. If you took a risk investing your capital, but that return is taxed the same as wage income (which has zero risk associated with it), you would be discouraged from investing that capital, and instead consume more of it (ala, why invest in your business buying plant and equipment, when you could just go on a lavish vacation!).

The fairy tale that no one would invest if, instead of 100%, they were only allowed to keep, say, 50% of the profits is far-fetched. The game would go on, only with more (in the optimal case) redistribution and less accumulation among the already well-off. The issue here is the relative inequality caused by capital gains, which in the long run tears societies apart, because the middle class can no longer afford apartments/houses and vacations, and the lower class can no longer afford basic needs (food, health care, mobility).

Realized capital gains should be taxed as income. They are income.

Your second sentence applies to labor as well: "I'm the one doing the work, yet the government benefits..."

Either "all taxation is theft", or "taxation is the government charging for providing the services necessary for work and business to operate".

Think the point they are making is the repeated taxation is semi-ridiculous.

1. Work a job and pay income tax 2. Invest remaining income, capital gains are taxes when liquidated. 3. Buy a car with the remaining gains, pay sales and property tax 4. Sell car, pay sales tax again 5. Reinvest money, earn gains, pay taxes on them 6. Repeat

The same money just keeps getting taxes. His point is that the money should be taxed once and only once.

A lower rate for the same amount of income in capital gains compared to salary makes sense. But why is the top rate for capital gains only 20% when it's 38% for income? (plus whatever the state adds on top). Why aren't there more brackets that go higher for capital gains as well?

> A lower rate for the same amount of income in capital gains compared to salary makes sense.

Why? This argument is often given as an axiom without any reasoning behind it.

There is often handwaving about "risk", but a worker has risks due to not being able to supply the labor that they are selling. They invested in their labor through paying for education and training.

Why is their "risk" not considered the same as capital "risk"?

> Why is their "risk" not considered the same as capital "risk"?

a worker gets paid when they worked - there's no capital risk. They took a risk when they invest in skills for the job, but that risk isn't capital risk. If you are saying that their job should compensate for the initial risk they took getting educated, then i would say this risk pay-off is embedded in the salary of the job they took.

> but a worker has risks due to not being able to supply the labor that they are selling.

Modern worker agreements (a.k.a most normal jobs) do not have downside risk if you can’t deliver. You just lose your job and stop gaining money. With capital investments you can easily undo 5 years of gains in 1 bad year.

The controversial answer might be that the wealthier brackets are more likely to be holders of financial investments, and the tax code seems to clearly benefit wealthier groups because the tax code is influenced BY the wealthier class through lobbying and the sorts.

If I had no context of the situation, I would see the lower % as a way to incentivize people to invest their money in things that would fall under capital gains.

The stock market grows by an average of something like 10% per year. Mutual funds charge a couple percent fees but usually still make a profit. If you are losing money long term as an investor then you’re a bad one

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