# Should long term capital gains be taxed progressively? **URL:** \ **Category:** Great Debates\ **Created:** [November 11, 2015, 6:57pm UTC](https://boards.straightdope.com/t/should-long-term-capital-gains-be-taxed-progressively/737313 "2015-11-11T18:57:28Z")\ **Posts on this page:** 8\ **Page:** 2
**Author:** ![Tom\_Tildrum](https://avatars.discourse-cdn.com/v4/letter/t/e95f7d/32.png) [@Tom\_Tildrum](https://boards.straightdope.com/u/Tom_Tildrum)\ **Post date:** [November 12, 2015, 9:44pm UTC](https://boards.straightdope.com/t/should-long-term-capital-gains-be-taxed-progressively/737313/21 "2015-11-12T21:44:34Z")
> [@Martin\_Hyde](#): > > …and then at some higher rung I’d eliminate the alternative tax rate for capital gains entirely and tax them at regular income rates. This would be a dramatic increase in revenue… Unless the increase in the rate led those high-income taxpayers to reduce their realization of capital gains, since these are the people who can afford to defer their income. That’s why the capital-gains rate is lower, after all; the thinking is that revenue is maximized at a lower rate because this form of income is more easily put off. ---
**Author:** ![Ruken](https://avatars.discourse-cdn.com/v4/letter/r/f475e1/32.png) [@Ruken](https://boards.straightdope.com/u/Ruken)\ **Post date:** [November 12, 2015, 10:31pm UTC](https://boards.straightdope.com/t/should-long-term-capital-gains-be-taxed-progressively/737313/22 "2015-11-12T22:31:35Z")
> [@Oredigger77](#): > > I’m in favor of progressive tax rates on capital gains but I think that the basis for the gains should be indexed to the CPI so only true gains get taxed. Some country does this. I found it for a similar thread, but I’m not seeing it. IIRC it wasn’t a strict index. Somebody objected that it would be too complicated. I disagree, but there are people out there who pay to have their 1040EZs filled, so maybe I’m wrong. ---
**Author:** ![Damuri\_Ajashi](https://avatars.discourse-cdn.com/v4/letter/d/898d66/32.png) [@Damuri\_Ajashi](https://boards.straightdope.com/u/Damuri_Ajashi)\ **Post date:** [November 12, 2015, 10:38pm UTC](https://boards.straightdope.com/t/should-long-term-capital-gains-be-taxed-progressively/737313/23 "2015-11-12T22:38:11Z")
> [@D\_Anconia](#): > > Progressive tax rates ARE government social engineering. Not really. They are an acknowledgement of marginal utility. Until recently, the justification for long term capital gains rates has NEVER been “Give capital a break so that they won’t take their ball and go home” Which is what the argument seems to be these days. We have gotten to the point where we now think that we should tax the income that is earned from the sweat of your brow at a higher rate than income earned on investments by the wealthy and the leisure class (we have so many things like 401Ks and IRAs in place that provide tax benefits for the middle class that the capital gains rate is almost inapplicable to them). I don’t know how the fuck we got here but here we are. Historically the argument for capital gains preferences has been: Relief from highly progressive tax rates: Back in the day, tax rates were HIGHLY progressive and if you sold IBM stock after holding it for 30 years, you might be subject to a 90% tax rate because the income came in one year instead of over 30 years. The capital gains rate was seen as a form of rough justice to alleviate this inequity. These days our rates are pretty flat. Relief from double taxation: Back in the day, corporate income taxes accounted for a much larger portion of our revenue base and capital gains rates were seen as a form of relief from that double taxation. Corporations frequently don’t pay any corporate level taxes at all while still paying out dividends and providing capital gains. ---
**Author:** ![Voyager](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/voyager/32/133_2.png) [@Voyager](https://boards.straightdope.com/u/Voyager)\ **Post date:** [November 12, 2015, 10:53pm UTC](https://boards.straightdope.com/t/should-long-term-capital-gains-be-taxed-progressively/737313/24 "2015-11-12T22:53:11Z")
> [@Tom\_Tildrum](#): > > Unless the increase in the rate led those high-income taxpayers to reduce their realization of capital gains, since these are the people who can afford to defer their income. That’s why the capital-gains rate is lower, after all; the thinking is that revenue is maximized at a lower rate because this form of income is more easily put off. People realize long term gains because they need the money, wish to lock in gains, wish to limit losses by selling declining investments, or to rebalance. I’m not sure how much a change in the tax will affect this. It won’t affect volatility very much, I’d think. ---
**Author:** ![Voyager](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/voyager/32/133_2.png) [@Voyager](https://boards.straightdope.com/u/Voyager)\ **Post date:** [November 12, 2015, 10:54pm UTC](https://boards.straightdope.com/t/should-long-term-capital-gains-be-taxed-progressively/737313/25 "2015-11-12T22:54:36Z")
> [@Damuri\_Ajashi](#): > > Not really. They are an acknowledgement of marginal utility. In terms of marginal utility I’d suspect tax rates these days are regressive. Though I haven’t looked at the curves. ---
**Author:** ![D\_Anconia](https://avatars.discourse-cdn.com/v4/letter/d/67e7ee/32.png) [@D\_Anconia](https://boards.straightdope.com/u/D_Anconia)\ **Post date:** [November 12, 2015, 11:18pm UTC](https://boards.straightdope.com/t/should-long-term-capital-gains-be-taxed-progressively/737313/26 "2015-11-12T23:18:12Z")
> [@Peremensoe](#): > > Nope. Not when they are applied equally to all people and all income. Yep. The primary purpose of progressive tax rates is to reduce income inequality. That’s government social engineering, by definition. ---
**Author:** ![sweeteviljesus](https://avatars.discourse-cdn.com/v4/letter/s/898d66/32.png) [@sweeteviljesus](https://boards.straightdope.com/u/sweeteviljesus)\ **Post date:** [November 12, 2015, 11:42pm UTC](https://boards.straightdope.com/t/should-long-term-capital-gains-be-taxed-progressively/737313/27 "2015-11-12T23:42:37Z")
I thought it was to counter the regressive nature of excise taxes. ---
**Author:** ![Ruken](https://avatars.discourse-cdn.com/v4/letter/r/f475e1/32.png) [@Ruken](https://boards.straightdope.com/u/Ruken)\ **Post date:** [November 13, 2015, 1:41am UTC](https://boards.straightdope.com/t/should-long-term-capital-gains-be-taxed-progressively/737313/28 "2015-11-13T01:41:26Z")
> [@Voyager](#): > > In terms of marginal utility I’d suspect tax rates these days are regressive. Though I haven’t looked at the curves. Wouldn’t surprise me. Of course, we have so many different flavors of taxes that there are a lot of ways to add them up. [Previous page](https://boards.straightdope.com/t/should-long-term-capital-gains-be-taxed-progressively/737313.md?page=1)