I asked a mod to consider moving this to GD. We’ll see.
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?
Why is it the responsibility of government to subsidize risk?
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.
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 incidentally.
But wait! It is higher! Consider section 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: