# Eliminating Capital Gains taxes **URL:** \ **Category:** Factual Questions\ **Created:** [February 9, 2016, 1:34am UTC](https://boards.straightdope.com/t/eliminating-capital-gains-taxes/745581 "2016-02-09T01:34:59Z")\ **Posts on this page:** 5\ **Page:** 5
**Author:** ![Ruken](https://avatars.discourse-cdn.com/v4/letter/r/f475e1/32.png) [@Ruken](https://boards.straightdope.com/u/Ruken)\ **Post date:** [February 12, 2016, 6:15pm UTC](https://boards.straightdope.com/t/eliminating-capital-gains-taxes/745581/81 "2016-02-12T18:15:49Z")
I asked a mod to consider moving this to GD. We’ll see. ---
**Author:** ![DrDeth](https://avatars.discourse-cdn.com/v4/letter/d/b487fb/32.png) [@DrDeth](https://boards.straightdope.com/u/DrDeth)\ **Post date:** [February 12, 2016, 6:17pm UTC](https://boards.straightdope.com/t/eliminating-capital-gains-taxes/745581/82 "2016-02-12T18:17:13Z")
> [@Damuri\_Ajashi](#): > > What benefit does a large write off give you if you’re broke? why would you be broke? What kind of moron invests so much in one deal that if it fails, he’s out on the streets? ---
**Author:** ![Fear\_Itself](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/fear_itself/32/19637_2.png) [@Fear\_Itself](https://boards.straightdope.com/u/Fear_Itself)\ **Post date:** [February 12, 2016, 6:40pm UTC](https://boards.straightdope.com/t/eliminating-capital-gains-taxes/745581/83 "2016-02-12T18:40:49Z")
> [@Sam\_Stone](#): > > Another common way small investors lose everything is to invest in a friend’s or relative’s venture. There, your investment is not treated as your own small business so you get none of the advantages. How many parents have mortgaged a house to help a grown child start a business with a promise of payback that never happens? Why is it the responsibility of government to subsidize risk? ---
**Author:** ![Deeg](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/deeg/32/2955_2.png) [@Deeg](https://boards.straightdope.com/u/Deeg)\ **Post date:** [February 12, 2016, 8:21pm UTC](https://boards.straightdope.com/t/eliminating-capital-gains-taxes/745581/84 "2016-02-12T20:21:27Z")
> [@Sam\_Stone](#): > > For small investors making one big play, the capital gains tax can actually change a positive expectation into a negative one - something the income tax doesn’t do. Again, any small investor that makes one big play is a moron. Small companies will often make one big play (e.g. open a restaurant) but the returns are long-term (and usually the risk is as well–the smart investor takes out a loan instead of paying cash up front). Can you give a concrete example of a smart one-big-play investment? Think of it this way: say an investor continues to make one big play ever year. Eventually that investor will lose and be SOL (and out of money). Tax policy has no bearing on the results. If you think raising CGT will reduce the number of one-big-play investors then that’s probably a good thing. ---
**Author:** ![Measure\_for\_Measure](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/measure_for_measure/32/557_2.png) [@Measure\_for\_Measure](https://boards.straightdope.com/u/Measure_for_Measure)\ **Post date:** [February 14, 2016, 4:16am UTC](https://boards.straightdope.com/t/eliminating-capital-gains-taxes/745581/85 "2016-02-14T04:16:01Z")
> [@Deeg](#): > > Again, any small investor that makes one big play is a moron. Small companies will often make one big play (e.g. open a restaurant) but the returns are long-term (and usually the risk is as well–the smart investor takes out a loan instead of paying cash up front). Can you give a concrete example of a smart one-big-play investment? Well the losses are likely to occur over the short term - most failed businesses fail quickly. And most small investors work with mutual funds, where capital losses offset capital gains. IIRC, tax losses can be deducted against ordinary income up to $3000 per year: losses not taken in one year can be carried over into the next. Presumably that limit could be raised for small businesses. That $3000 cap hasn’t changed at least since [1986](http://scholarship.law.marquette.edu/cgi/viewcontent.cgi?article=1797&context=mulr) incidentally. But wait! It _is_ higher! Consider [section 1244](https://www.law.cornell.edu/uscode/text/26/1244)! “In the case of an individual, a loss on section 1244 stock issued to such individual or to a partnership which would (but for this section) be treated as a loss from the sale or exchange of a capital asset shall, to the extent provided in this section, **be treated as an ordinary loss**.” For 1244 stock the cap is a whopping $50,000 per year. Section 1244 was first introduced in 1958 as a sop to small businesses. More details: > **[Section 1244 Stock Definition, Qualification Rules](https://www.investopedia.com/terms/s/section-1244-stock.asp)** > > Section 1244 stock is named after Section 1244 of the tax code, which allows losses from small, domestic corporations to be deducted as ordinary losses. [Previous page](https://boards.straightdope.com/t/eliminating-capital-gains-taxes/745581.md?page=4)