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Subject:  Re: Is your 401(k) Inadequate For Retirement Date:  8/3/2008  1:42 PM
Author:  fleg9bo Number:  13784 of 20599

If Joe Investor makes $200k this year in the market and Patricia Lawyer earns $200k in wages this year lets have them pay the same amount in tax.

I disagree for a couple of reasons.

1) Joe Investor has already been taxed on the money he invests. On top of that, he is taking the risk of losing it should his investment go bad. If you taxed cap gains at the marginal rate, a lot of people would simply stop investing. Risking your already taxed money so that any gain can be taxed again at 40%+ (including state taxes) is just not that appealing a prospect.

2) A lot of people who are already invested would put off selling to avoid the tax. Not good for individuals, the economy or tax collections.

I do, however, like the idea of everyone who earns income paying the same rate of taxation on earned income. If low-income people were all bitten by the IRS, we'd have a lot more people complaining about runaway spending by Congress. That would be a good thing.

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