Quote:
Originally Posted by d-ray657
The incentive should be designed to continue to encourage reinvestment rather than conversion of assets to cash.
Regards,
D-Ray
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There are, of course, severe limits to this. Yes, reinvestment should be encouraged. It should be encouraged by market forces rather than tax policy however.
Also, if you're going to tax capital gains as any other income - which is the process of using cash or property to generate income - then you need to zero out other types of taxes to assure that conversion of capital isn't dis-incentivized by tax policy:
- income from sale of assets / property, since that capital has already been taxed
- business property tax, since that has already been taxed
- any other tax on income, since that will be captured by treating capital conversion as revenue.
EDIT - it may also be useful to determine what an appropriate tax bracket would be for cap gains tax if taxed at regular income levels.