Clo,
Per my just posted reply on the other thread, I wouldn't be adverse to capital gains being taxed at or above the highest ordinary income bracket. I think it would be vastly better to tax ordinary income tax LESS .. ideally zero .. but if we are going to have an income tax on ordinary income capital gains should be more.
What that would produce is LESS capital gains (or, actually, more REAL gain in capital but much less tax collected from sales of capital assets as flipping would not make sense so much as buying smart and then being smart about maximizing operating cashflow).
That means LESS growth in stock prices and that means LESS growth in pension fund assets. Dividends and dividend quality would become -- as they are in a healthy stock market -- THE primary reason to buy a stock. On the other hand, I would think that capital assets would then have to be bought for actual cash flow and productivity. When someone bought a productive asset they would maximize cash flow and maximize holding periods. Investors would become more real investors, particularly in seeking dividends or cash flow from the investment and thinking long term.
BTW, dividends (partial cash flow for partial ownership) and income from operation/ownership and interest (loaning out your savings for productive use) of a productive asset should be taxed as ordinary (ideally zero, again) ... that is really important (a productive asset is a LEVER of an owner/managers mind and effort, for increasing cash flow or speeding insolvency, not a speculation). Short sided people would be tempted to envy those who operated productive assets productively and want to further tax them...but that would be foolish and counterproductive. In such as system you would see a huge boom in capital formation and capital aggregation and capital utilization ... and jobs and more jobs and wealth accumulation for those who were actually PRODUCTIVE. The citizens would, in aggregate, become more wealthy ...
If you are following me, you should be able to imagine how that would be a very, very good thing. That is basically the process which made the US the envy of the world and an economic powerhouse. We have been running that process in reverse now for arguably a half century ... or maybe more like a century. Have we learned our lesson yet?
We have incrementally replaced productivity (and capital formation and aggregation and utilization) with speculation/financialization and bloating of the nanny state. More debt gives us more of the same: less efficiency, less REAL productivity, less wealth more need for welfare, etc. Less debt and less tax on ordinary income (production) made (and would make us again) incrementally compound wealthy through time. It's just common sense, clo. Set aside your mistaken beliefs and biases. Was the early America a "nanny state" with a huge central government? Did we debase our currency and tax ordinary income (production)? You are living the long term playing out of a destructive trend, Clo. It is near its end. Let the rotten structure collapse and lets get back to basics.
"Experience keeps a dear school but a fool will learn in no other." -Franklin
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