The Briefing Room

General Category => Politics/Government => Topic started by: IsailedawayfromFR on December 10, 2017, 04:11:46 pm

Title: Republicans’ tax plan takes a quirky swipe at the little guys
Post by: IsailedawayfromFR on December 10, 2017, 04:11:46 pm
Quote
Republicans are supposed to be the party that cuts the job-killing capital-gains tax, not raises it. But because of a quirk in the Senate-passed bill, the tax on capital gains may go up — and for some types of long-held assets, fairly substantially.

Most members of Congress don’t even know of this stealth capital-gains hike.

Here’s the story. At the start of the year, Republicans promised to reverse the near-60 percent rise in the capital-gains tax under President Barack Obama — a hike that helped bring investment rates to historic lows. The GOP plan was to eliminate the ObamaCare 3.8 percent investment-tax surcharge on capital gains and dividends‎.

That repeal never happened. But now the Senate tax reform proposes to raise several billion over the next decade by changing the rules on how stocks are taxed.

It would require shareholders to sell their oldest shares in a company before their newest purchased ones. The older the share, the larger the taxable capital gain. This is called the first-in-first-out accounting system.

Consider this example. Let’s say you bought 100 shares of Apple stock in 1998 at $100 a share‎. And let’s say you bought another 100 shares in 2008 at $300. If you sold 100 shares at $500 a share, you would have to “sell” the oldest stock and pay a $400 per share capital-gains tax, versus $200 a share under the current law.
https://nypost.com/2017/12/08/republicans-tax-plan-takes-a-quirky-swipe-at-the-little-guys/
If individuals are forced to sell older stock but mutual funds are not, this does not seem fair at all.

Either this provision goes away or we need to kill this tax bill once and for all.
Title: Re: Republicans’ tax plan takes a quirky swipe at the little guys
Post by: Hoodat on December 10, 2017, 04:31:54 pm
I don't have a problem with FI-FO accounting, especially when considering the lower tax rate offered. 

FI-FO doesn't increase the overall tax load.  It simply allows the government to collect sooner rather than later.  And in this case, that will come at a lower rate than it would have last year.
Title: Re: Republicans’ tax plan takes a quirky swipe at the little guys
Post by: IsailedawayfromFR on December 10, 2017, 04:52:06 pm
I don't have a problem with FI-FO accounting, especially when considering the lower tax rate offered. 

FI-FO doesn't increase the overall tax load.  It simply allows the government to collect sooner rather than later.  And in this case, that will come at a lower rate than it would have last year.
But why not make it for all, rather than picking winners (mutual funds) vs losers (individuals)?
Title: Re: Republicans’ tax plan takes a quirky swipe at the little guys
Post by: Hoodat on December 10, 2017, 05:08:11 pm
Corporations shouldn't have to pay capital gains taxes at all.  Besides, their primary customer group is made up of little guys - individuals who cannot risk putting their eggs in the single basket of single stocks, but who can spread the risk by investing in mutual funds.
Title: Re: Republicans’ tax plan takes a quirky swipe at the little guys
Post by: Bigun on December 10, 2017, 06:13:25 pm
Corporations shouldn't have to pay capital gains taxes at all.  Besides, their primary customer group is made up of little guys - individuals who cannot risk putting their eggs in the single basket of single stocks, but who can spread the risk by investing in mutual funds.

The Marxist income tax itself is the problem and is completely unworthy of existing in a supposedly FREE society!

http://fairtax.org (http://fairtax.org)
Title: Re: Republicans’ tax plan takes a quirky swipe at the little guys
Post by: jmyrlefuller on December 10, 2017, 06:16:51 pm
The Marxist income tax itself is the problem and is completely unworthy of existing in a supposedly FREE society!

http://fairtax.org (http://fairtax.org)
Wouldn't that tax also cover capital gains? After all, it is a sale.
Title: Re: Republicans’ tax plan takes a quirky swipe at the little guys
Post by: Bigun on December 10, 2017, 06:25:53 pm
Wouldn't that tax also cover capital gains? After all, it is a sale.

NO Sir! NO income of any kind would be taxed!  The only thing taxed would be the brokerage fees!
Title: Re: Republicans’ tax plan takes a quirky swipe at the little guys
Post by: NavyCanDo on December 10, 2017, 07:47:04 pm
 I don’t need to look further than the child tax credit. With my son 16 this is the last year I can claim it. The GOP plan extends it a year and increases the amount
Title: Re: Republicans’ tax plan takes a quirky swipe at the little guys
Post by: Emjay on December 10, 2017, 08:04:23 pm
I don’t need to look further than the child tax credit. With my son 16 this is the last year I can claim it. The GOP plan extends it a year and increases the amount

Most kids are not self-supporting at 16.  In fact, they just get more expensive.  The credit should be extended to 18.
Title: Re: Republicans’ tax plan takes a quirky swipe at the little guys
Post by: Snarknado on December 11, 2017, 03:07:12 am
I don't have a problem with FI-FO accounting, especially when considering the lower tax rate offered. 

FI-FO doesn't increase the overall tax load.  It simply allows the government to collect sooner rather than later.  And in this case, that will come at a lower rate than it would have last year.

I agree, it's just a timing issue and not that big a deal, especially as an alternative to actual higher rates.

As far as mutual fund treatment being "unfair", it's the investors who benefit in the form of deferred cap gains distributions. Those investors are penalized enough as it is by having to pay taxes on investments that haven't even been sold yet. And by the time they do sell, the gain they already paid taxes on could have evaporated. Cap gain distributions should be eliminated entirely, and taxes paid only on whatever gain exists at the time of sale - same as with individual stocks...
Title: Re: Republicans’ tax plan takes a quirky swipe at the little guys
Post by: WingNot on December 11, 2017, 03:16:22 am
Most kids are not self-supporting at 16.  In fact, they just get more expensive.  The credit should be extended to 18.

Or as long as they are living in your basement or until the reach age 40....  Which ever comes first.