I had the same reaction. It also seems easy to pull apart. What about disabled people who are unable to work?
replyI think something more like "investment income should be taxed at a higher rate than income earned through labor," accomplishes similar goals but is more intuitive and less problematic.
If your goal is to reduce investment that creates jobs for labour, then you should do that.
replyThis is a false dichotomy. Laborers could just as easily invest in job-creating endeavors as passive income earners. All taxes cause economic drag, not _just_ business and investment income taxes. The economy includes every participant, and laborers are not an externality.
replyI'm sorry, I don't follow. Yes, people who are labourers could also somehow creating funding pools that are big enough to start companies, but so what? That doesn't negate the fact that they will be disincentivised to do so by a tax on investment income.
replyWhat will they think of next? tying healthcare to employment that you lose the moment you get fired to meet quarterly profits? Madness i tell you!
replyNot as dystopian as the ability to get wealthier without working and pay no taxes (and even IF you sell to realize gains, your tax liability is still lower than someone who made money through labour)
replyYour definition of "wealthier" is stupid, though, because it relies on a measure that doesn't actually apply to the person in question. A share's price is just "the last sale price of the same type of share", and that is multiplied by the person's shareholding to get their "wealth". However they don't have any more money by this happening - it's just a huge assumption that the share price would stay the same across all their shares if they sold right now.
replyThe time we actually know what money they would make, making it concrete for tax, is when they sell. And we already do this.
There's multiple advantages to making money from equities that people who make money from ordinary income simply do not have, favourable tax rates, the ability to choose when and how much to realize, the ability to loss harvest, compound interest, everything around how we tax these 2 forms of income is set up to beget inequality.
reply> everything around how we tax these 2 forms of income is set up to beget inequality
replyNo it's not. Most people don't pay capital gains because things like houses don't have capital gains applied. I.e. the rules are set up so that most people avoid capital gains tax when they gain capital. Everyone pays income tax with the same rules, and some people pay capital gains tax as well if their risks pay off. We tax the profits and let investors absorb the losses.