Subject: Progressive, growth oriented fair taxation of invesments Comment: Progressive, growth oriented, fair taxation of invesments Capital gains and interest investment income should be taxed based on the real return after inflation. For capital gains, this should be done by adjusting the basis, and for interest, the amount of interest reported should be reduced by the loss of purchasing power of the principal. The calculations should be made by banks and brokerage's computers during preparation of the 1099's, so that in most cases the individual would not need to calculate the adjustment. To promote growth, the adjusted real capital gains and actual dividends can be discounted based on an individual's tax braket. To be progressive, the discount should vary by the tax bracket. Perhaps half of real capital gains and real interest can be excluded in lower and middle tax brackets, and no exclusion (other than that for inflation) in the top bracket, and something in between in the second to top bracket. Also there are a few other unfair features of investment taxation. The requirement to depreciate and later recapture deprecial of rental real estate shouldbe optional. The invester, each year, should be able to choose to take the depreciation or not take it. The recapture should be based on the actual depreciation actually taken, not what could have been taken. This would correct an unfairness that an invester may recapture depreciation in a higher bracker than he took it, considering that many years of depreciation can be bunched together in the year of sale. Also, the indexation of basis for capital gains should apply to collectibles. It is unfair that high income tax payers are treated more favorably than low income tax payers due to the 28% rate that helps only the rich. |