So if investment income, cap gains, and ordinary income are taxed at the same rate, what effect would that have on investment in the US?
How about taxing munis and Treasury bonds? Talk about the law of unintended consequences.
Capital gains shouldn’t be taxed at all. ‘Course I’m a radical.
They don’t get it. They just don’t get it.
Then, when an investor converted any of his capital to personal income to purchase food, clothing, shelter, charitable donations or services, tax it the same way you tax any other personal income.
“So if investment income, cap gains, and ordinary income are taxed at the same rate, what effect would that have on investment in the US?”
Probably none. We should remember that Reagan’s landmark Tax Reform Act of 1986, a bill that Reagan says required a “herculean effort” to get to his desk, taxed capital gains and ordinary income at the same rate, 28%. Did the economy suffer? No, it grew prodigiously. If a man sees an opportunity to make a winning investment, he generally won’t turn it down because he has to pay tax on it.
That’s why many tax policy experts recommend taxing capital gains at the same rate as ordinary income and using that additional revenue as a way to eliminate corporate taxes altogether. Eliminating corporate taxes would do much more to stimulate growth and investment.