# What should the capital gains tax be? **URL:** \ **Category:** Great Debates\ **Created:** [July 15, 2016, 11:03am UTC](https://boards.straightdope.com/t/what-should-the-capital-gains-tax-be/759967 "2016-07-15T11:03:49Z")\ **Posts on this page:** 11\ **Page:** 7
**Author:** ![Ruken](https://avatars.discourse-cdn.com/v4/letter/r/f475e1/32.png) [@Ruken](https://boards.straightdope.com/u/Ruken)\ **Post date:** [July 19, 2016, 1:59am UTC](https://boards.straightdope.com/t/what-should-the-capital-gains-tax-be/759967/121 "2016-07-19T01:59:10Z")
> [@DrDeth](#): > > If you dont know what corporations are and how they limit legal liability, then there’s no use giving you a cite. > > Here’s wiki anyway. > [United States corporate law - Wikipedia](https://en.wikipedia.org/wiki/United_States_corporate_law) > > are you just pretending you dont know or are you trying to make a point? An article I know well, which neither addresses my ownership of my company’s assets, nor mentions a requirement to disclaim them to limit my liability to my investment. Ownership does not require unlimited liability. ---
**Author:** ![DrDeth](https://avatars.discourse-cdn.com/v4/letter/d/b487fb/32.png) [@DrDeth](https://boards.straightdope.com/u/DrDeth)\ **Post date:** [July 19, 2016, 2:14am UTC](https://boards.straightdope.com/t/what-should-the-capital-gains-tax-be/759967/122 "2016-07-19T02:14:38Z")
> [@Ruken](#): > > An article I know well, which neither addresses my ownership of my company’s assets, nor mentions a requirement to disclaim them to limit my liability to my investment. Ownership does not require unlimited liability. Please then, explain to us corporate law in America then.:rolleyes: If Rukenco gets sued is Ruken liable? If Ruken owns a house, can Rukencos debtors seize it? If Rukenco owns real property, in whose name is the property registered? Are you Rukenco or is Rukenco a separate legal entity? ---
**Author:** ![crypto](https://avatars.discourse-cdn.com/v4/letter/c/b3f665/32.png) [@crypto](https://boards.straightdope.com/u/crypto)\ **Post date:** [July 19, 2016, 3:20am UTC](https://boards.straightdope.com/t/what-should-the-capital-gains-tax-be/759967/123 "2016-07-19T03:20:55Z")
This has been an interesting discussion… Just curious, but what if your primary residence suffers a loss? This would not be an “investment property” to be flipped, but someone who has lived in it for 10 years and the market has tanked. Can they claim a loss? Or is this person out of luck? Or is there a percentage of loss they would have to absorb before they could write off the loss on the property value? ---
**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:** [July 19, 2016, 4:13am UTC](https://boards.straightdope.com/t/what-should-the-capital-gains-tax-be/759967/124 "2016-07-19T04:13:48Z")
> [@DrDeth](#): > > When I earn my wages it is taxed then when I spend it I pay sales tax. That’s TWICE. You are not being taxed on income with a sales tax, you are being taxed on consumption. Double taxation usually only occurs in two situations. When multiple jurisdictions all tax the same income and when the same income is taxed at multiple levels. You’re just wrong, I don’t know how else to put it. > [@](#): > > When the plumber buys a car, the car dealer _Entity_ is taxed once. When the owner (different _entity_) of the car dealership withdraws the profit from the dealership, they are taxed on different income. Since they are different \*entities. \* That is not the premise of taxation. Many other entities do not get taxed at the entity level and the owner of the entity is taxed at the individual level. Entities that frequently do not have an entity level of taxation: S Corporations LLCs REITs RICs Partnerships Trusts The dividend is not different income to the owner of the car dealership. It a distribution of income from the car dealership to its owners. > [@](#): > > I am a “tax and financial professional” and it’s purely a political term in line with “death taxes”. I am having trouble understanding with branch of tax and financial professional services would not know the standard definition of double taxation and would insist that double taxation is a purely political term when the term is primarily used in a non-political context. The fact that your political enemies like to use the term because they like the way it sounds does not make it a political term and it certainly doesn’t make it a “purely” political term. I can’t think of any non-political context in which death taxes or pro-abortion might be used. Double taxation is a very well known and very well understood tax policy issue. The concept of double taxation are familiar to almost every tax lawyer I know. And most of them don’t have huge problems with it. We simply tax some items of income twice but we don’t confuse double taxation on dividends with double taxation due to a fucking sales tax. I don’t think an accountant would ever confuse the two. I don’t think a tax lawyer would ever confuse the two. Indeed, I don’t think anyone that knows what the fuck they are talking about would confuse the two. Perhaps you want to retract some of what you said in haste before you thought things through, either the part about double taxation or the part about being a tax and financial professional. ---
**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:** [July 19, 2016, 4:21am UTC](https://boards.straightdope.com/t/what-should-the-capital-gains-tax-be/759967/125 "2016-07-19T04:21:46Z")
> [@Peremensoe](#): > > I know. I don’t see this as any kind of problem. If he wants to avoid this, there are various ways he can arrange to spread his income out. Me neither. Both because its not hard to structure your way around with installment sales and also because our tax system is relatively flat. ---
**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:** [July 19, 2016, 4:33am UTC](https://boards.straightdope.com/t/what-should-the-capital-gains-tax-be/759967/126 "2016-07-19T04:33:33Z")
> [@Chronos](#): > > When was the owner previously taxed on that income? > > And my objection to the term “double taxation” is because it is wildly inaccurate. Because it is so inaccurate, it is only ever used by people trying to make a political point. The political position they are arguing for, being based on a falsehood, is unsurprisingly unjust, and so I object to it, too. Here let me google that for you. [http://lmgtfy.com/?q=double+taxation](http://lmgtfy.com/?q=double+taxation) What do you know. The term double taxation being used by people who are not trying to make a political point. ---
**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:** [July 19, 2016, 4:40am UTC](https://boards.straightdope.com/t/what-should-the-capital-gains-tax-be/759967/127 "2016-07-19T04:40:47Z")
> [@The\_Lurker\_Above](#): > > Imagine that you were forced to make a complete listing of all your assets (maybe you’re getting divorced and the court wants to know what you have so it can be split with your soon-to-be-ex). > > Do you list [ol] > [li]Stock in XYZ (at a value of $A)[/li][li]100 cows (at a value of $A)[/li][li]Stock in XYZ _and_ 100 cows (at a value of $2A?)[/li][/ol] > > From a legal standpoint you really do only own XYZ. The fact that XYZ is a ‘person’ who can own things separately from the owners of XYZ is kinda the whole point. And the fact that as the sole owner of XYZ you can trivially transfer any asset from XYZ to yourself doesn’t change that. From a tax point of view (and most economic points of view) a single member LLC is a sole proprietorship with limited liability if they check the box. The multi member LLC is a partnership and the S corp is a pass through corporation. If you are the sole owner of an LLC, then you own the underlying assets. There is a liability fence drawn around those assets for liability purposes so that if your cows kill someone, they can only take the cows but those are your cows just as much as if you owned them outright. SMLLCs are disregarded for tax purposes. Owning those same cows through a C Corporation imposes an entity level of taxation. There is no little to no functional difference in how you operate those two. The tax difference is significant. ---
**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:** [July 19, 2016, 5:02am UTC](https://boards.straightdope.com/t/what-should-the-capital-gains-tax-be/759967/128 "2016-07-19T05:02:18Z")
> [@Some\_Call\_Me.Tim](#): > > Do you understand what the word ‘profit’ means? > > I chose to use that word because it was more concise, but as you appear not to have grasped the meaning I will explain further. When I said that tax would be paid on the ‘profit’ I was referring to the difference between the amount spent (1m in my example) and the amount received(2m). Thus, I was referring to a tax on the 1m that was in excess of the amount spent initially. > > Do you think that paying taxes on the $1m profit is ‘double taxation’? Or does taxing money that a corporation pays out as required by a contract only count as ‘double taxation’ when we call that contract a ‘stock’? It depends on whether the $1mm in profit is being taxed twice. Its only double taxation when the same income is taxed twice. And other than than taxation by multiple jurisdictions, this is commonly understood to mean the taxation of income at the entity and investor level. It is commonly understood this way by non-partisan apolitical tax and financial professionals and has been understood this way long before most of us were ever born or Grover Norquist decided he wanted to drown the government in a bathtub. What other corporate payments are you referring to? Dividends are pretty unique among all corporate payments in that it is not a payment, it is a distribution. Most corporate payments are deductible. Dividends are not. ---
**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:** [July 19, 2016, 5:19am UTC](https://boards.straightdope.com/t/what-should-the-capital-gains-tax-be/759967/129 "2016-07-19T05:19:08Z")
> [@DrDeth](#): > > Please then, explain to us corporate law in America then.:rolleyes: > > If Rukenco gets sued is Ruken liable? > > If Ruken owns a house, can Rukencos debtors seize it? > > If Rukenco owns real property, in whose name is the property registered? > > Are you Rukenco or is Rukenco a separate legal entity? I think I might see the problem. You seem to think that limited liability somehow removes you from ownership for tax purposes. A single member LLC (or SMLLC) is disregarded for tax purposes. You own the underlying assets for tax purposes. I don’t know why its got some of you so bothered. Hellestal was here a little while ago, he agreed that it was double taxation and it didn’t bother him that it exists. I call it double taxation and I tell you it doesn’t bother me that it exists, I just point out that it is one of several bases upon which people argue for a capital gains preference. But the commonly accepted definitions of the term as it is used by apolitical professionals seems to bother you guys. ISTM that it is you and not the term that is politicized. ---
**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:** [July 19, 2016, 5:21am UTC](https://boards.straightdope.com/t/what-should-the-capital-gains-tax-be/759967/130 "2016-07-19T05:21:12Z")
> [@crypto](#): > > This has been an interesting discussion… > > Just curious, but what if your primary residence suffers a loss? This would not be an “investment property” to be flipped, but someone who has lived in it for 10 years and the market has tanked. > > Can they claim a loss? Or is this person out of luck? Or is there a percentage of loss they would have to absorb before they could write off the loss on the property value? Losses from the sale of personal use property are generally not deductible. Primary residence generally falls into this category. ---
**Author:** ![Ruken](https://avatars.discourse-cdn.com/v4/letter/r/f475e1/32.png) [@Ruken](https://boards.straightdope.com/u/Ruken)\ **Post date:** [July 19, 2016, 10:02am UTC](https://boards.straightdope.com/t/what-should-the-capital-gains-tax-be/759967/131 "2016-07-19T10:02:06Z")
> [@DrDeth](#): > > Please then, explain to us corporate law in America then.:rolleyes: > > If Rukenco gets sued is Ruken liable? > > If Ruken owns a house, can Rukencos debtors seize it? > > If Rukenco owns real property, in whose name is the property registered? > > Are you Rukenco or is Rukenco a separate legal entity? None of this addresses my ownership of Rukenco’s assets or a need to claim they aren’t mine to maintain protection under LLC law. I am certainly liable, limited to my assets that I have organized under Rukenco. [Previous page](https://boards.straightdope.com/t/what-should-the-capital-gains-tax-be/759967.md?page=6)