From: whs70@dancer.uucp (22501-sohl)
Subject: Re: VOTE, BABY, VOTE!
Organization: Bellcore, Livingston, NJ
Distribution: usa
Date: Fri, 6 Nov 92 15:40:34 GMT

In article <1992Nov6.093340.7001@RedBrick.COM> jfr@RedBrick.COM () writes:
>  REMEDIAL FINANCE 101:
>
>  If you invest your money in ANYTHING capital-related (stock, real
>  property, bonds, savings accounts, R&D, etc), and ultimately take
>  your money out with a profit, you only pay tax on the CAPITAL GAIN
>  (i.e., the profit made above and beyond the initial investment)
>  Hey, folks, that's why they call it the CAPITAL GAINS tax :-)
>
>  You do not, no matter what you think, pay tax again on the money
>  you earned.  That's your money to do with what you want (spend it
>  and pay sales tax on it, invest or save it, or stick it in a
>  mattress).  The money you invest is called your basis.  Anyone
>  who has ever bought a home and sold it knows that the basis of
>  your house (which is even adjusted up by the money you spend to
>  try and sell it and clean it up for sale) is subtracted from the
>  amount you sell it for to determine what your taxable profit
>  (or rollover) is.  

A point you do not acknowledge is that the value of your money due
to inflation goes down over time and there is NO current way to
offset that without paying taxes on the "dividends" you get if yoiu
invest your money.  The capital gains tax would be more acceptable
if it allowed for an adjustment of your initial dollar investment
based on inflation.  Example: I buy a house for cash $200,000.
Ten years from now I sell it for $300,000.  Why should I pay 
capital gains on $100,000 IF the inflation rate has essentially
offset that added $100,000 value of the home? 
  
>  In fact, if you LOSE your money (your stock goes bust, your house
>  burns and is uninsured - turkey :-) not only don't you pay tax
>  again, you can even take a deduction for your CAPITAL LOSS.  Of
>  course the noble Bush administration managed to mangle the capital
>  loss rules last time around so there are stringent limits on what
>  one can deduct in a given year and it has to carryover to future
>  years, but over time, you can write off the loss against future
>  taxes.  

I may be wrong, but I thought you could only take a capital loss
as an offsetting amount against a capital gain today?  In other
words, if in 1992 I lose $50,000 on my investment, I can't
just make a deduction of $50,000 against my regular income, I can
only deduct the $50,000 against other investment  or capital
gain income (if then I have no other investment/capital gain
income that I can apply the $50,000 loss against, I lose the deduction.).

...Additional write-up on marginal tax rates deleted.  The write-up,
by the way, was well done and I've tried explaining that same thing 
to others also, often with little success.  Those that won't/can't
understand the workings of the marginal tax brackets are the same
people that have told my wife she shouldn't work because it will
cause me to pay higher taxes on every dollar of our joint income.

Standard Disclaimer- Any opinions, etc. are mine and NOT my employer's.
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Bill Sohl (K2UNK) BELLCORE (Bell Communications Research, Inc.)
Morristown, NJ             email via UUCP      bcr!dancer!whs70
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Newsgroups: alt.politics.clinton,alt.politics.democrats.d,alt.politics.elections,talk.politics.misc