Search This Blog

Thursday, December 6, 2012

A Canadian's proposal to avoiding the ‘fiscal cliff’

Professor Jonathan Rhys Kesselman of Simon Fraser University in Vancouver has an article in The Globe and Mail today (12/6/12) on suggestions for the U.S. in addressing the "fiscal cliff" and expiring tax cuts.  Professor Kesselman had a guest post in this blog in 2009 (1/1/09 post).

He suggests a different scheme for taxing both short-term and long-term capital gains via the tax base rather than a separate rate structure.  The U.S. has had various approaches to taxing capital gains back to the start of any different treatment in 1921.  Perhaps you remember the 60% exclusion for long-term capital gains in the 1980s? (I do)

President Obama has proposed only keeping the lower capital gain rate for the 98% of individuals who are not "upper-income."  That seems unnecessary given that the 98% don't have much in the way of capital gains.  The treatment should be the same, I think, which makes it more simple.  Also, there is a lot of dollars at stake in what the rate is - people in that 2% group have a lot of capital gains and dividends.

Take a look at Professor Kesselman's proposal - here.

What do you think?

No comments: