Message Font: Serif | Sans-Serif
No. of Recommendations: 2
When you chose to invest in a non-retirement account you pay your income tax and capital gains tax. That is being taxed twice.

I don't see how. The capital gains tax is not paid on your cost basis (the invested amount on which you paid ordinary income tax). It is only assessed against the gains on that investment.

If I invested $1000 of my earnings (for which I paid $280 in Federal income tax) in a stock , and that investment grew to $3000 by the time I sold it over a year later, I would then pay 20% LTCG on the $2000 gain ($400). I now have $3000 cash in hand for which I paid a total of $680 in taxes. No double taxation here.

Where do you ever pay both ordinary income tax and capital gains tax on the same dollar?

Print the post  


What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.