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?
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