Time to rethink capital gains tax

October 01, 2011

Why is it that when I send my money out to work, it is taxed at a lower rate than when I go to work?

Recent discussions of marginal tax rates, limits on deductions, and class warfare miss that essential question about our personal (not corporate) taxes.

Some argue that capital fuels our economy and that taxing dividends or gains at all is a disincentive to investment. I would suggest the opposite. When a corporation (and nearly all job generating businesses are) generates profits, it can reinvest or pay out to shareholders. If moving the money to personal income of the owners is cheap, it encourages extraction of the money from the corporation rather than leaving the money where it could grow jobs.

Joe Stocks, Baltimore

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