Congress held a meeting recently to discuss the capital gains taxes and how they might be reformed. This is one of the great American debates and has major impacts, specifically on the wealthy, and can take a lot of time to debate and determine what the best route is.
Currently capital gains are taxed at a maximum of 15 percent, compared to the top rate of 35 percent on ordinary income. Some Senate members argue that the reforming the tax system must include a review of the rates on capital gains to find a level that sparks broad based growth, creates jobs and strengthens the economy.
Many feel that the reform process needs to consider the capital gains rate in conjunction with those on individual wage income, corporate income and dividends.
Many American often scream out about how little the wealthy pay in taxes and it is typically a direct response to the capital gains tax. Capital gains tax rates are typically lower than wages thus middle class Americans tend to pay more in taxes.
I’m a firm believer that our entire code needs to be rewritten to cause a major shift in our economic future. Both sides of the aisle need to come together and find a solution. Part of the solution maybe adding more side to the aisle and make it less about Red or Blue, less about Donkey or Elephant, and more about the country and its citizens.
The main problem with revamping the tax code is that we still need to balance a budget. It doesn’t do us any good to raise or lower taxes if we don’t know how we are going to spend the money. However, the size of the Code makes it difficult to comprehend an opportunity to simplify it or create a massive overhaul of the system.
Pertaining to capital gains, everyone is in favor of a change, unless it affects them. Who is going to support capital gains changes that cause someone to pay more taxes? Many people question when the money should be taxed. Should it be taxed when earned or realized?
What are your thoughts? Do you like the capital gains tax rate as is or does it need to change? How would you change it?
Feel free to stop in a Liberty Tax office and start a discussion about this blog!
Disclaimer: Every effort has been taken to provide the most accurate and honest analysis of the tax information provided in this blog. Please use your discretion before making any decisions based on the information provided. This blog is not intended to be a substitute for seeking professional tax advice based on your individual needs.