From: jfr@RedBrick.COM ()
Subject: Re: VOTE, BABY, VOTE!
Organization: Red Brick Systems, Los Gatos, CA
Distribution: usa
Date: Tue, 10 Nov 1992 07:01:53 GMT

In article <1992Nov9.164715.24445@ucsu.Colorado.EDU> fcrary@ucsu.Colorado.EDU (Frank Crary) writes:
>In article <1992Nov9.045647.27179@RedBrick.COM> jfr@RedBrick.COM () writes:
>>>Take a look at the form: Line 13:
>>>"Income: Capitol gains or (loss) (attach Schedule D)" [where you
>>>must itemize your capitol gains] and Line 14: "Income: Capitol gain
>>>distributions not reported on line 13". These are added in
>>>to get your taxable income.
>
>>  This is pure nonsense and shows an incredible lack of understanding.
>>  Read the IRS tax instructions again.  Go talk to a CPA.  READ THE
>>  STATEMENT ABOVE for Chrissakes :-)  Line 14 is for CapitAl gains
>>  NOT REPORTED ON LINE 13.  Those reported on Line 13 are NOT reported
>>  again.  You DO NOT, REPEAT DO NOT, pay both regular and capital gains
>>  tax on the same gains.  
>
>I'm not claiming that capital gains are reported twice on the form 1040.
>However, one way or another (e.g. line 13 and scheduel D or line 14)
>_all_ capital gains are reported and taxed as income: You do, in fact
>pay regular income tax on capital gains. Someone posted earlier that
>if you pay capital gains tax you don't have to pay regular income tax
>on that money. However, the IRS seems to have a different opinion.
>
  Capital Gains Tax *IS* Regular Income Tax!  Why do so many people
  have the misconception that somehow there is another special tax
  called the "capital gains tax" (BTW, nice to see you are spelling
  it correctly now, Frank :-).  The only reason it has this special
  name is that before Reagan/Bush, long-term capital gains were only
  taxed on 50% of the gain, rather than the full amount.  Thus, you
  needed to fill out a special schedule (schedule D) to work out how
  much was your capital gains, before moving it to Line 13 of your
  1040.  Since the effective RATE of tax on capital gains was lower
  than the rate on regular income, this was called the capital gains
  tax rate and the capital gains tax for short.  The tax was still
  only collected on your 1040 and was (and is) only collected ONCE.
  Yes, all capital gains are reported and taxed as income (today
  at the same rate as other income).  They are NOT reported and taxed
  as anything else that I know of (except possibly if there are also
  sales taxes involved on certain sales of property).  So, please
  Frank, tell us that you now understand this and stop this nonsense
  about double taxation of capital gains.  It just ain't so!  

  BTW, to try and add some CONTENT to this post instead of just fire,
  it is interesting to point out that prior to Reagan when the highest
  marginal tax rate was 70%, capital gains taxes, even after the gain
  was reduced by half if it was long-term, were 35% of the gain.  
  Today, with a top marginal tax rate of 28% and capital gains taxed
  at full value, the rate is 7% lower than pre-1980.   So all this
  BS about there needing to be a capital gains tax cut is hogwash.
  The capital gains tax rates are at the lowest they ever were (28%)
  except for the five years between 1981 and 1986 when they were
  25% (the top marginal tax rate had been lowered to 50% under Reagan
  and capital gains were still getting preferential treatment).  
  The biggest boom in capital spending in this countryu was during
  the 50s and 60s when the top marginal tax rate was as high as
  90% and capital gains taxes were as high as 45%  People invest
  not to cut their taxes but to leverage their invested dollars.  
  If they have to pay taxes, so be it, it just means they have to
  try and make their dollars return more.  The reason investment
  is down is simply because we have built a society of business
  people based on short-term results, not long-term investments.
  As such, they have sought refuge with their investments in off-shore
  opportunities where they feel they can get a bigger bang for their
  bucks.  But cutting the capital gains tax won't help that.  Giving
  investment tax credits might, or maybe giving capital gains cuts
  ONLY for long-term investments in risky on-shore businesses.  

  Jon Rosen
Xref: sparky alt.politics.clinton:15892 alt.politics.elections:22710