I was listening to some guy on the radio talk about capital gains taxes and how he thinks they shouldn't be raised but lowered b/c a lower rate increases employment or something. I didn't really buy what he was selling, but it got me thinking.... I'm curious what the BZ brain-trust thinks about this.
Wouldn't it be wise to have a regressive tax rate on Capital Gains determined by length of the investment?
If the investment is held for less than 1 year = tax at regular income tax rate
1-2 years = 30% Tax
2-3 years = 25%
3-4 years = 20%
4-5 years = 15%
6-7 years = 10%
7+ Years = 5%
Or you can lower the rate every 2 years, or gradually scale it back to a higher number than 5%, make the highest rate only on 6 month investments, get to 20% quicker etc
I'm not worried about the numbers but moreso want to hear opinions on the concept.
To me it would seem that a system like the one above would encourage more responsible investing and more importantly it would foster innovation and perhaps healthier employment practices. A corporation works to please it's shareholders and in today's age I think that sometimes means CEO's make decisions that look good for the next quarterly report rather than what is good for the long term health and growth of the company (in part b/c he may not be around to see it). Now, in my scenario if shareholders know that they can avoid a heavier tax by waiting to sell their stock wouldn't they care less about the yearly bottom line and more about the company's long term positioning? If that's the case, wouldn't a company put some money into R&D and hold onto some of it's talented employees as opposed to some of the more economically destructive behaviors we've seen lately?
Tell me why I'm an idiot and then let's see if we can make this thing work. I'm not concerned about whether some traders would freak out, I'm concerned about being the best country we can be on the whole.
Then we'll give our proposal to Obama when he goes on Reddit.