Taxes

Gary, we've had this discussion before, a home is not capital.

Actually, it is: privately owned capital.

Definition: Capital is something owned which provides ongoing services. In the national accounts, or to firms, capital is made up of durable investment goods, normally summed in units of money. Broadly: land plus physical structures plus equipment. The idea is used in models and in the national accounts.

http://economics.about.com/cs/economicsglossary/g/capital.htm

lower capital gains taxes on stocks and investments has had no effect on investments in the last 40 years.

One could argue that higher Capital gains taxes encourage continued investments in a stock. Moving the stock would cause one to incur the tax. Leaving in one place reduces ones exposure to the tax.

A lower tax could also be a cause of market volatility as investors see a small tax as less of a burden than losing a money on a stock in the short term.

One can argue anything one wishes, but if lower capital gains taxes have "had no effect on investments in the last 40 years", as you say, then why the explosion of mutual funds and the heavy reliance on equities by pensions? I think that decision makers, individuals and fund managers, put more into equities, in large part, because of the lower tax rate on the investor. This stimulates economic growth. If the capital gains tax is increased, people may go to other investments, which would inhibit expansion by companies (hiring, capital improvements) and negatively impact the economy--how much is open to debate, but in these hard times, do you want to risk such a contraction?

Capital gains taxes is only a part of tax policy. Congress (for the feds) and state and local legislators have put in place tax breaks, as I have outlined, to serve a societal purpose. If any particular tax policy isn't working, it can be changed.

Gary, what that says is that the tax code ignores economics but seriously effects economics.
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Economics is a science not a tax code.
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Gary used the tax code to define economic terms.
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Music, I thought this thread was about taxes.
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Gary used the tax code to define economic terms.

What he did was quote the definition in the tax code of "capital". The tax code has it right. The code doesn't disagree with the definition I was taught in finance and tax law courses.

Gary, what that says is that the tax code ignores economics but seriously effects economics.

So does the dictionary. And the 99% of the people who are not economic academics. I did not know that economic academics had purchased the word capital and the right to its definition. I would like to see who owned the rights and therefore could sell it to them. Otherwise you might want to have a talk with some academics in the English department about how definitions of words are placed into the language.

Of course I know when you listen to a lawyer you need a copy of Black's Law dictionary to understand what was meant, but lawyers are special bottom feeding scum. :)

or the companies finances are so complicated and diverse it takes that many IRS personel to weed through all the filings
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