any country that doesn't incentivize investment will quickly languish. what the usa should do is allow pre-tax income to be invested, so poor people can also take advantage.
I’ve often seen an equivalence made on this forum between levying higher capital gains taxes and discouraging investment. While they are certainly related, rates of capital gains taxes aren’t the primary driver of productive investment.
We have observed close to two decades of rapid asset price inflation that can very reasonably be argued outstripped actual productive activity. Rent seeking isn’t something that should be incentivized either and is ultimately a very corrosive behavior in our economy, politics and society.
Interestingly, some do. The thought of making some money by buying a small amount of some high-growth stocks, with fractional investment being a thing for several years, energizes many small-time users of Robinhood and similar services. It's still a better gamble than buying lottery tickets, which many poor folks do a lot, sadly.
Poor people are people like us (or sometimes are us), some are quite prudent and would love to make an investment that pays, even if it's small.
>any country that doesn't incentivize investment will quickly languish
And yet the US is pretty unique amongst countries in treating capital gains as wholly different from earned income, and taxed significantly less if at all.
Even as someone who benefits from it, I've yet to see a good argument as to why a working stiff should pay more taxes than someone who makes their income from investments. That's inherently regressive.
because investments result in growth, which results in revenue which results in more being taxed in the net.
consider all of these VCs throwing away money on things like uber. would it be better if they just kept it in a savings account (because of no financial benefit of investing)? most investments don't pay off, so you need a push, the push is that long term capital investments are taxed less.
Again, I don't mind VC's being rewarded, I do mind them paying far lower effective tax rates than the average working guy. Income is income. Maybe we have a carve out that says you can make up to the median household income in capital gains and that's taxed at a low rate, but much beyond that should be taxed just the same as if you earned it working.
I'd need to see a convincing breakdown of the numbers indicating that tax incentives make the difference between risky investments being worth it or not worth it. My suspicion is even if capital gains were much higher, there still isn't anything better to do with your money than invest it.
Also pretty sure savings interest is taxed as capital gains.
