Taxation and the middle class

[ijmorlan]

I don't think that has been made clear yet, but the impression is that will apply to the whole gain ( reduced by all eligible deductions).

That would only work if you have in some way crystallized (and paid taxes on) the capital gain prior to the new rules coming into effect. When you sell an asset, you will always pay taxes on (the included part of) the capital gain, which is the selling price less the acquisition costs, regardless of when it was acquired.

Well, the point is that an existing owner of an asset accrued capital gains, and therefore tax, based on the existing rules. We are now changing the rules, and taxing the already-accrued capital gains based on the new rules is a confiscation of existing wealth.

That is not a conclusive argument, because we’re talking about “should”s here, but if instead of some hugely wealthy person we imagine a person with a good middle class job whose savings are mostly in the form of a rental property or two, the new rules might have severely affected their retirement plans. Even if we’re talking about enormously wealthy people it’s generally bad for people when the rules aren’t predictable, and it’s certainly bad for the investment climate in a country.

The real question is how to make us all wealthier, while measuring that in a way which doesn’t lead to massively unsustainable changes like burning as much fossil fuel as we do. Also make sure the “predictability” I’m talking about applies to everybody. For example, a farmer who is planning based on owning their land, should be allowed to sell when they want to for the price they can negotiate with a buyer, rather than being expropriated by the government acting on behalf of a huge corporation.