<p>Busdriver11, if it makes you feel better, I don’t think you are rich. :)</p>
<p>Bus, thanks for getting people safely to their destination so they can be with their families for the holidays during these stormier months of the year.</p>
<p>^ 
:)</p>
<p>Thank you dstark, I feel much better.</p>
<p>Then again, it may be more because I just got a glass of wine after a stressful day, and it tastes very good.</p>
<p>:)</p>
<p>'so which is it -" go where the job is" or" anyone can move to wherever they personally decide to and start up"</p>
<p>Both! I’m reacting to the idea that anyone would care about “family background” for either a young person starting his / her career, or perhaps a more established professional who might be looking to relocate to a new area. I don’t doubt that it is that way in your area, alh, but I just don’t think that’s something that can be extrapolated to most of the country. </p>
<p>In our hypothetical Des Moines example, there’s simply no reason that would prevent my kids from taking a job in Des Moines if one so interested them, or my lawyer-neighbor from deciding to pack it up and move to Des Moines. The idea of “family background” or that there’s some kind of secret codeword that they wouldn’t have access to because they didn’t grow up there just doesn’t compute. </p>
<p>Well, I do suppose that if the good people of Des Moines found out I was their mother, they might bar them :-).</p>
<p>“Bus, thanks for getting people safely to their destination so they can be with their families for the holidays during these stormier months of the year”</p>
<p>Well thank you. Though I must admit that right now I’m not getting anybody or anything anywhere, that would be less stressful. I am in the middle of my annual simulator checkride, which even though I have never busted one in thirty years of flying, is always stressful. Just hope for me to get Christmas off!</p>
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<p>Indexing the capital gain basis with inflation (or deflation), but removing the special tax rate for long term capital gains would be a desirable change in tax laws. As it is now, the definition of long term as a year plus a day creates unusual incentives in asset holding and sale.</p>
<p>Eliminating the special tax rate for long term capital gains would also eliminate the various shenanigans available to classify carried interest and the like as long term capital gains. Note that the difference in rates also means that there are shenanigans about using long term losses to offset short term gains, if one times the gains and losses to have an excess of long term losses and short term gains in the same year.</p>
<p>I don’t define " having more than others around me" as necessarily having more money.
So perhaps the definition of " rich" is having the financial stability to take care of at least modest needs enough that I can use other criteria to determine value to me than " can I afford it"?.</p>
<p>Why should capital gains tax get indexed for inflation when earned income isn’t? </p>
<p><a href=“http://www.nerdwallet.com/blog/investing/2013/2013-capital-gains-tax-rates-fiscal-cliff-38-net-investment-income/”>http://www.nerdwallet.com/blog/investing/2013/2013-capital-gains-tax-rates-fiscal-cliff-38-net-investment-income/</a></p>
<p><a href=“2022-2023 Federal Income Tax Brackets”>http://taxes.about.com/od/Federal-Income-Taxes/fl/Federal-Income-Tax-Rates-for-the-Year-2014.htm</a></p>
<p>We already index for inflation the brackets for both earned income and cap gains taxes. The brackets are tied together.</p>
<p>I agree that raising cap gains tax rates to ordinary rates will end the shenanigans. </p>
<p>So ucb, do you want to index cap gains tax brackets twice? Do you just want to just eliminate cap gains tax rates and tax long term cap gains rates up to 39 percent?</p>
<p>By the way, look at the tax brackets where cap gains are tax free. </p>
<p>Better would be just to treat the real (with basis adjusted for inflation) capital gains as ordinary income – no special rates for capital gains (and resulting special rules) like there are now.</p>
<p>Of course, if you have a problem with the yearly adjustment of ordinary income tax brackets, or the existence of more than one income tax bracket, that is a separate issue.</p>
<p>@ucb, while u are busy adjusting the basis of capital gains for inflation, you can also “adjust” the cost of college tuition for inflation.</p>
<p>UCB, Well…depending on the situation…you can be giving those with long term cap gains… tax cuts compared to what they pay now. </p>
<p>It would get rid of the short term game playing which is good. Actually, I have to think about this. Might not.</p>
<p>There is still an edge with cap gains over earned income. </p>
<p>Do you want to get rid of the capital gains exclusion for homes? </p>
<p>Yes, some longer term capital gain taxes would be smaller, but the “short long term” (e.g. 1 year + 1 day) capital gain taxes would be higher.</p>
<p>Indexing the basis for inflation may result in long term held houses’ capital gains to be much smaller, since much of real estate price inflation is reflective of general inflation. Removing the exclusion would certainly simplify the tax laws, although it could have undesired effects in making the real estate market more “sticky” in places where people have substantial gains even after adjusting for inflation. So it is not necessarily obvious what the optimal change (if any) on this front from a public policy standpoint is under a scenario were capital gain basis were inflation adjusted, but capital gains were taxed at regular income tax rates.</p>
<p>Of course, dividends should lose the special income tax rates as well.</p>
<p>Dividends should be taxed liked earned income. Don’t see why a bricklayer toiling in the hot sun should be subject to a harsher tax scheme than an income-stockholder napping on a coach…</p>
<p>UCB…We are still going to have long term gains taxed advantaged. </p>
<p>Hmmmm…this is complicated.</p>
<p>A firm, maybe a hft firm or market making firm, trades $100 million a day and makes $100,000 a day in long term gains because trading futures is partially long term. So…the firm trades $25 billion a year and makes $25 million. </p>
<p>Inflation is 2 percent a year. 2 percent of $25 billion is $500 million. You get to add $500 million in costs due to inflation. This firm is not going to be paying any cap gain taxes…that is for sure. </p>
<p>I like the 1986 tax rules. Long term cap gains were taxed similarly to earned income. </p>
<p>I agree. Tax long term capgains the same as earned income, then impose a tax penalty on short term capgains. </p>
<p>Those high-speed day traders produce nothing, and their automated nanosecond trades can cause dangerous wild swings in the stock market. Locusts…</p>
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<p>Only for the true long term holders. And then it becomes gradually more significant the longer one holds, rather than a cliff at one year, but no other change afterward.</p>
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<p>A high frequency trader or a market maker is not going to hold anything long enough to receive any inflation adjustment on the capital gain basis of anything bought and sold within a day. So the $100,000 each day would be ordinarily taxable income (although since such traders are typically corporations, the complexity of corporate income tax, with nominally high tax rates, but lots of deductions, comes in).</p>
<p>A future (or option) may be a contract over a longer term, but the buying and selling of the such a contract within the same day is not long term. Even under today’s rules, if you buy a future for a transaction more than a year in the future, but then sell it the next day, the capital gain (or loss) would be short term.</p>
<p>UCB, where are you getting your info?</p>
<p><a href=“Tax Advantages of Futures Trading | StoneX Financial Inc, Daniels Trading Division”>http://www.danielstrading.com/trading-tips/2013/03/27/tax-advantages-of-futures-trading/</a></p>
<p>I have tax returns somewhere around here. ;)</p>