The elimination of the capital gains tax would create more investment options; reduce income inequalities (Letters)

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Discussions are underway in Washington these days about eliminating the capital gains tax and subjecting all capital gains to regular tax rates. I am divided on the capital gains tax. On the one hand, the Biden government needs to fund its infrastructure proposals. Infrastructure should not be financed by increasing the deficit. In addition, capital gains tax favors the rich and contributes to income inequality. On the other hand, as a practitioner for over thirty years, I have seen more bad investment decisions made because of capital gains tax. Investors would continue to hold on to bad investments rather than pay capital gains tax and watch their investments decline.

I propose to completely eliminate the capital gains tax. Rather than taxing capital gains, I would subject all investment accounts to progressive wealth tax. Investors could buy and sell as many times as they wanted without having to worry about the tax consequences. IRA accounts could be deleted. At the end of the year, investors would pay a tax on the size of their accounts. The government would have a vested interest in ensuring that investors prosper. Investment firms would benefit from increased business activity. Taxpayers would benefit from much simpler schedules for filing taxes. Capital markets would benefit from a more efficient and effective allocation of capital. And society would benefit from reducing income inequalities.

Paul Chiampa, East Longmeadow

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