Curt Clawson makes the point that the rate is now 20% plus some surtaxes and can run as high as 23.8% (marginal) for the wealthy, when in 2012 it was only 15%. It's a good point.
Last week I got into a discussion with another poster here about using a net worth tax instead of income tax in this country. I advocate a net worth tax. He apparently did not agree.
Consider a net worth tax of 1%. If I have a large investment portfolio that makes a steady return, that return is probably 7-8% before inflation. In 2012 if I paid 15% of my investment income in capital gains tax (which of course requires a certain asset-appreciation style of investing to avoid mixing in short term gains)...15% of 7-8% is 1.05 to 1.2%.
With a net worth tax things get a lot simpler because it's harder to hide gains until they are realized and play various other income-deferral and income-offsetting games. Also a net worth tax would permit me to drop my opposition to lowering estate taxes, thus allowing people more easily to keep their family farms and other small businesses. It's a pay-as-you-go approach instead of an event-driven approach.
How is a net worth tax a bad thing compared to using income tax on investment income? Someone please make that argument so that I can think about it. Are the mechanics too difficult to enforce? What else?
Last week I got into a discussion with another poster here about using a net worth tax instead of income tax in this country. I advocate a net worth tax. He apparently did not agree.
Consider a net worth tax of 1%. If I have a large investment portfolio that makes a steady return, that return is probably 7-8% before inflation. In 2012 if I paid 15% of my investment income in capital gains tax (which of course requires a certain asset-appreciation style of investing to avoid mixing in short term gains)...15% of 7-8% is 1.05 to 1.2%.
With a net worth tax things get a lot simpler because it's harder to hide gains until they are realized and play various other income-deferral and income-offsetting games. Also a net worth tax would permit me to drop my opposition to lowering estate taxes, thus allowing people more easily to keep their family farms and other small businesses. It's a pay-as-you-go approach instead of an event-driven approach.
How is a net worth tax a bad thing compared to using income tax on investment income? Someone please make that argument so that I can think about it. Are the mechanics too difficult to enforce? What else?