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Comment by ryanSrich | Hacker News Reader

You could fix the tax system in a few easy steps:

- Eliminate capital gains tax. Taxing capital gains is essentially blind theft, and there's a strong moral foundation to stop doing it. I believe the US would have greater economic prosperity by eliminating a capital gains tax.

- Just tell people what they owe/what they are owed. You're the IRS, there's no reason why I should be telling YOU how much I made when you already know the answer. If I think you're wrong, I can prove that.

- Stop auditing people who are making less than $5m/year in income. The amount of revenue recovered from smaller earners is negligible and resources that now go to the IRS to staff thousands of agents could be used a hell of a lot better.

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> Eliminate capital gains tax.

That's a terrible idea. Capital gains is basically the only way to tax the uber and intergenerationally wealthy. If anything, capital gains tax should be at the same level as income tax, so that there's less economic incentive to game the system.

> Capital gains is basically the only way to tax the uber and intergenerationally wealthy

That's just simply not true. There are thousands of ways to tax the ultra wealthy. We just don't use any of them. Capital gains tax is a horrendous idea that mostly punishes the middle class for doing well in the stock market. The uber wealthy are feeling none of that pain. Find a different solution.

>Capital gains tax is a horrendous idea that mostly punishes the middle class for doing well in the stock market.

That's simply not true. The top 1% own 50% of all stocks: https://finance.yahoo.com/news/the-richest-1-own-50-of-stock...

The whole other 99% of the population share 50% of all stocks. Most of "middle class" own little to no significant amount of stocks.

Also, if you must work, you're working class. The "middle class" is a propaganda term to keep the working class divided between those who feel like they're successful from those who are struggling. And speaking to the success of that propaganda: 22% of people think they're "middle class" and aren't: https://finance.yahoo.com/news/22-americans-mistakenly-think...

It is actually true. The wealthy will die without liquidating most their stocks, then the basis gets reset when their heirs inherit it. In practice, they don't pay tax. But the reform to fix that is to eliminate the basis resetting rule.

My capital is miserable, but the CGT on it comes out of my free cash. I had a tiny trust fund mature and had to borrow a third of my salary to pay the tax bill.

> Eliminate capital gains tax

This would both:

1. Reward people who piggy back on the productivity and growth of the economy.

2. Punish those who are the actual backbone of the economy.

It doesn't sound like a strong moral foundation to me.

Taxing labor isn't theft but taxing capital gains is? How does it make sense to want to tax the direct products of someone's time and energy and direct contribution to society, and not want to tax the gains of sitting on capital assets while central banks pump them up?

  "Stop auditing people who are making less than $5m/year in income."

If P(audit) literally equals zero, all rational agents will stop paying tax.

> Taxing labor isn't theft but taxing capital gains is?

In an ideal world all taxation would go away and the IRS would be abolished. In the real world we have to work with what’s feasible, and I think killing capital gains tax could be a feasible platform to run on as a leader.

> If P(audit) literally equals zero, all rational agents will stop paying tax.

If you’re making over $5m and are pretty much guaranteed to be audited, why would you stop paying taxes?

Well I'm not an anarchist so I believe we need some taxes. Labor tax is the highest priority for elimination, and there should be more buy in for that idea because the middle class benefits more, since most of their living comes from incomes than capital gains.

Capital gains tax is good if the loopholes are fixed such as cost basis resetting upon death. Otherwise we need a global wealth tax, negotiated between the EU and US to avoid capital flight. Such a tax is actually good because it improves the quality of our democracy by reducing the ability for ultra wealthy people to enact their crony capitalist corruption. This is a unique reason to tax capital wealth that isn't applicable to labor taxes.

  "If you’re making over $5m and are pretty much guaranteed to be audited, why would you stop paying taxes?"

I'm talking about people under $5m

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