Talk:Capital gains tax in the United States

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Short-term capital gains[edit]

I know you liberals don't want to expose how much taxation occurs in the USA. (Liberals = 90+% of wikipedia editors.) But, Wikipedia is sort encyclopedia.

So, how about SPECIFICALLY STATING what the tax is on Short-term capital gains? Thanks! —Preceding unsigned comment added by (talk) 22:00, 25 November 2007 (UTC)

The article in fact states the tax rate: "Short-term capital gains are taxed at a higher rate: the ordinary income tax rate."EECavazos (talk) 22:47, 25 November 2007 (UTC)
    • Short Term Cap Gain Rate: Securities held 1yr Or LESS: Taxed @ Ordinary income (Investor Tax Bracket)
You damned liberals and your whole Constitution thing. (talk) 00:44, 10 December 2007 (UTC)

Libertarian soundbite?[edit]

Under the criticism section there is a pretty gratuitous plug for the Libertarian Party. There's really no reason for it to be there, but as long as it is, I will make sure the socialist position stays there as well.

I don't really know how to make external links as the Libertarian editor did, but if someone feels they should be there, here are some American Socialist parties that could be linked to:

Democratic Socialists of America

Socialist Party USA

World Socialist Party (USA) —Preceding unsigned comment added by (talk) 05:03, 17 April 2008 (UTC)

-I removed the "socialist" soundbite that referred to Marxism. The issue at hand is the capital gains tax, not the existence of capital gains. While the Libertarian comment does resemble a plug, it at least holds some relevance to the topic of capital gains tax. (talk) 15:09, 12 August 2008 (UTC)

Well, shouldn't the line "which is morally equivalent to theft", at least read "which [by their doctrine] is morally equivalent to theft"? —Preceding unsigned comment added by (talk) 14:12, 14 August 2008 (UTC)

As a libertarian who is not a member of the Libertarian Party, I agree that this should not refer to the LP. It's fallacious to imply (as it does now) that ONLY members of the LP believe this. The truer statement is "People who advocate for a smaller role in government (such as libertarians and some conservatives)..." with the appropriate links to Wikipedia pages on those topics. Dylan38 (talk) 07:51, 1 October 2008 (UTC)

I likewise agree with the silliness of having the libertarian reference. The complaint that corporate income is doubly taxed is a common one, not only one from libertarians, as the article suggests. This references to people making the claim needs to be deleted. The fact of the matter is that the income IS taxed twice. Whether this is desirable or not is another topic. I am deleting the libertarian reference.--Jlamro (talk) 22:39, 5 March 2009 (UTC)

LTCG for the 10 and 15% tax brackets[edit]

The page indicates that LTCG for those in the 10% and 15% ordinary income brackets would pay 0% in long-term capital gains taxes, but the IRS website indicates that this rate is 5%:

Can someone explain why this rate would be 0%? Am I missing something here? —Preceding unsigned comment added by (talk) 13:57, 29 August 2008 (UTC)

New material[edit]

A new anonymous user added the following to the article:

The $250K / $500K exemption is not increased for home ownership beyond 5 years and has led to some interesting behavior in high price areas. Some people in California drive many hours a day polluting the air and wasting gasoline because it is cheaper to spend the money on gasoline rather than pay tens or hundreds of thousands of dollars of taxes to move. Others cannot move to jobs in other cities because the capital gains tax. (Robert Bruss, lawyer and writer, Washington Post: The real estate section of the Washington Post suggests to move often to avoid capital gains tax in expensive areas.

I removed the material. First, the text as written is tendentious without clearly stating that the verbiage is the opinion of the writer of the source material. Second, and more important, the source material does not say that this is the opinion of the writer of the source material -- the source does not say that California drivers are "polluting" the air and "wasting" gasoline. The "polluting" and "wasting" commentary appears to be the opinion of the anonymous user who inserted the material. This is a classic example of citing a source for a proposition that is not found in the source. The statement about "others" not being able to move to jobs in other cities because of the capital gains tax is not exactly what Robert Bruss was saying, either. And the Washington Post material does not suggest that people "move often to avoid capital gains tax in expensive areas". The first sentence, regarding the exemption not being increased for ownership beyond five years, is correct, but so what? I'm not clear why this should be in the article. (It appears to be the thought of the anonymous user that this would be a good idea to put into the law, perhaps??) Famspear (talk) 13:24, 25 October 2008 (UTC)

In short, the source materials in large measure do not stand for the propositions stated in the text (i.e., lack of verifiability). Famspear (talk) 13:30, 25 October 2008 (UTC)

1. If a person drives far to work, he is polluting; it is not POV. I can change it to "wastes gasoline" instead of "polluting". OK with you?
2. I can change the material from real estate and tax lawyer, Robert Bruss to a direct quote. OK with you?
3. "Move more often to save tens or hundreds of thousands of taxes" to a direct quote from article. OK with you?
These are techniques used in high price areas. This is what is going on in real estate on east and west coast urban and waterfront areas. By the way, I am not NEW to wikipedia, but have been contributing for years. (talk) 16:07, 25 October 2008 (UTC)

Dear user IP71.131.18.214: I agree that if a person drive "far to work," his or her vehicle is emitting pollutants. The point is that this is your conclusion and my conclusion; it is not something discussed or found in the source material. You are violating the Wikipedia rules. Sources must stand for the proposition stated in the article. Same thing with "wastes gasoline."

If you want to quote lawyer Robert Bruss directly, the acceptability of that quote would depend on how it is used in the article. The same Wikipedia rules (Verifiability, Neutral Point of View, and No Original Research) apply to quotes as well as to paraphrases. Edits are "OK" if they conform to Wikipedia rules, etc. I don't care whether the techniques you describe are "techniques used in high price areas" or whether something is or is not "going on in real esate [sic] on east and west coast urban and waterfront areas." Let's focus on following Wikipedia rules. Famspear (talk) 16:58, 25 October 2008 (UTC)

OK. I worked for an hour and fixed it to be the way you want it to be. Is it ok now with you so we can stop reverting each other work? As an aside point, a car driven a long commute is polluting and wasting gasoline and is a well known fact and not an opinion, but I removed it anyway to avoid argument. (talk) 17:41, 25 October 2008 (UTC)

Some of the material appears to be "how to" material that might not be appropriate for Wikipedia. However, I'll try to take a closer look at it later. Yours, Famspear (talk) 18:16, 26 October 2008 (UTC)
Hmmm. I don't see any how to material. Let me know specific thing you refer to. (talk) 19:11, 27 October 2008 (UTC)

Alternative minimum tax can raise capital gains rate, article is incorrect in this situation and misleading[edit]

Alternative minimum tax can raise capital gains rate beyond what is stated in article if you have a large sale (selling your home for example). Article is misleading and incorrect in stating the rate is 15% (in case of AMT). (talk) 16:15, 25 October 2008 (UTC)

"No offset for gains due to inflation" correction[edit]

"The capital gain upon which the tax is calculated is not inflation adjusted. Thus for example, a gain that is entirely due to inflation (currency debasement), is not a real gain at all, nevertheless this illusory gain is taxed. Inflation has not been anywhere near 15% since the 1970's, and inflation levels are not necessarily positively correlated with capital appreciation."

I removed the bold sentence because it is inaccurate and irrelevant.

Year over year inflation rates do not have to be anywhere near 15% for an illusory capital gain to be taxed.

The thought that 'inflation levels are not necessarily positively correlated with capital appreciation' is laughable. An overall rise in prices is the definition of inflation.

"Fair share" and net tax revenue[edit]

I'm preparing an article in another encyclopedia, and I need information on how the capital gains tax rate affects tax revenue. I heard somewhere that "raising" the capital gains tax (i.e., increasing the percent from say 20% to 40%) has been advocated by some on the grounds that the rich should pay their fair share. Others have said that raising the rate paradoxically lowers tax revenues, because investors defer sales to avoid the tax when they think it is too high.

Is there enough historical data to let the reader decide whether this theory makes sense? That is, has the CG tax rate ever been raised so quickly (or so high) that the tax revenue it generated went down? Or has the rate ever been lowered, leading to (paradoxically again) an increase in CG tax revenue? I think Newt Gingrich was advocating something like that.

Also, what do various economists say about the effect of changing the tax rate? --Uncle Ed (talk) 11:49, 16 March 2009 (UTC)


For starters, how on earth is considered a worthwhile source? The rule in Reliable sources is "an established expert on the topic of the article whose work in the relevant field has previously been published by reliable third-party publications..", which doesn't seem to be fulfilled, here. (talk) 06:03, 27 March 2009 (UTC) Gattsuru

double taxation?[edit]

The counterpoint in the double taxation section (i.e., that wage earners pay multiple taxes as well, since their employers pay it before paying them) is both unsourced and wrong. Wages paid to employees is a business expense; thus, this is not a good example of another form of double taxation.

There are other reasons why the tax code exists as it is (for instance, in corporations, higher taxes are the price levied for the privilege to gainfully participate in an enterprise while not assuming any of its legal liability beyond the amount invested), and perhaps they should be mentioned. I'm not going to put them in because I don't have a good enough background to source anything, but I'm throwing this out to anyone who might. —Preceding unsigned comment added by (talk) 04:41, 15 April 2009 (UTC)

Just because someone says it's double taxation doesn't mean we should include in in this section. There is no merit to the double taxation argument. If I invest 100,000 and earn 10% or 10,000, I am taxed once on my profit or GAIN of 10,000. That is obviously not double taxation. I am deleting the portion that suggests capital gains is 2x tax. (talk) 03:41, 19 January 2013 (UTC)

Please Define "qualified five-year 18% capital gains rate"[edit]

Please elucidate the following bullet:

After 2010, the qualified five-year 18% capital gains rate (8% for taxpayers in the 15% tax bracket) will be reinstated.

Does this mean that capital gains on assets held longer than 5 years will be taxed at only 18% rather than 20%? Thx. —Preceding unsigned comment added by (talk) 22:37, 12 June 2010 (UTC)

Ditto - I would like this explained. Virillustre (talk) 17:23, 18 July 2012 (UTC)

The "Opinions about tax is correctly labeled POV, and non-encyclopedic[edit]

And, it should be removed to an appropriate forum for discussion of opinions, or else complemented with discussion of all tax issues, such as the fairness of Cap. gains rates being so much lower than the ordinary income rates applicable to earned income. —Preceding unsigned comment added by (talk) 21:50, 31 December 2010 (UTC)

And it's nonsense. A loss is a loss, a gain is a gain. If you have more dollars now than you did before, you made a gain and you pay the tax. If you did nothing with your dollars and it's "worth less" because of inflation, do you want to claim it's a loss and get a tax refund on it? Plus, the size of your profit scales with inflation. And the tax is a percentage, not an absolute, so it scales with inflation. The whole thing reeks of either math illiteracy or political sophistry. I agree the entire section should be removed or moved to an article on fallacy. (talk) 20:55, 14 October 2011 (UTC)

A Capital Gain is Not Income[edit]

  • The only instance where a capital gain can be considered "income" is where a mutual fund which one invests in sells stock held in that mutual fund, adds the gain from that stock sale to the value of the mutual fund, at which point the investor sells his mutual fund. The additional value for which that investor is selling his mutual fund shares are considered a "profit" but still taxed at capital gains rates. So really even in this instance, there is not income, but rather a Capital Gains "Profit". Please anyone elucidate if you have other thoughts, otherwise I am changing that entry to omit the use of the term income in relation to Capital Gains. Here's the passage I changed -- "pay income tax on the net total of all their capital gains just as they do on other sorts of income" 10stone5 (talk) 06:07, 11 August 2012 (UTC)
For federal income tax purposes, which is what we're talking about here, a capital gain is "income". That is, a capital gain is included in "gross income" under Internal Revenue Code section 61. A capital gain is a kind of "income." Famspear (talk) 14:07, 11 August 2012 (UTC)
Oh, and just to be clear, the distinction that you tried to raise regarding the word "profit" is also incorrect. Famspear (talk) 14:09, 11 August 2012 (UTC)
Background: The federal income tax law generally divides "income" into two categories: "ordinary income," and "capital gains." Subject to some exceptions not material here, the general rule is that if you buy stock in, say, ExxonMobil or IBM for $100 and you later sell it for $120, you have a $20 realized capital gain, which is includible in "gross income" under Internal Revenue Code section 61(a)(3), as a "gain" from a "dealing in property." The term "profit" is just another term that you could use to describe the gain. Famspear (talk) 14:20, 11 August 2012 (UTC)

State CGT[edit]

Most US states impose their own Capital Gains Tax on top of the federal CGT. Seems that an article about "Capital Gains tax in the United States" ought to at least acknowledge this. Grover cleveland (talk) 03:52, 16 September 2012 (UTC)

Here's the line.

All significant reductions in the long-term capital gain tax rates have preceded a recession by one to four years.

For some reason, Arzel removed this leaving only an implausible edit comment: "Not a RS, plus "significant" is weasel in this sense. Correlation without causation trivia". I'm StillStanding (24/7) (talk) 04:03, 27 September 2012 (UTC)

Its probably not a RS, but the information in the chart could be found in a RS, so it's not a big deal. However Arzel is correct about this implying correlation without cause. Find an RS that makes this case.  little green rosetta(talk)
central scrutinizer
04:10, 27 September 2012 (UTC)
"Significant" is a statistical term in this sense, however ther is no statistical analysis in the source that would dictate what a "significant" recession is. As it is the editor defined "significant" to fit the outcome. It is quite clear when you look at the source that the author simply looked for all the reductions in capital gains and then counted the number of years until there was a depression and then said there was a "significant" link between the two, however there is no analysis to back up the claim. Also, the biggest recession of all, the great depression, does not follow the pattern as rates had not changed for a number of years (according to the chart) before 1929, and then rose after 1929. If anything the chart shows that the increase in 1933 delayed the recovery from the great depression. I find it depressing that ISS would restore this. Arzel (talk) 19:24, 27 September 2012 (UTC)
"Significant" referred to the reduction in the Capital Gains Tax not a "significant" recession. As for the change in 1933, that occurred during the Great Depression and obviously shouldn't be a factor in this discussion. While I never said there was a link or cause and effect between CGT reductions and recessions, it should be noted in the article as politicians claim that lowering the CGT brings on prosperity. ----Cgersten 22:59, 27 September 2012 (UTC)
Right, the issue here isn't whether we can show that the correlation comes from causation, only that reliable sources note the correlation. I'm StillStanding (24/7) (talk) 05:52, 28 September 2012 (UTC)
My left knee hurts when it rains, so obviously my left knee is correlated with rain..that must mean something? Right? You both do realize that the source being used is just a table, ISS I don't know when you took to supporting original research. Arzel (talk) 13:54, 28 September 2012 (UTC)

Page needs to be updated to reflect new law[edit]

This page needs to be updated to reflect the American Taxpayer Relief Act of 2012 ("ATRA" or H.R. 8). I hesitate to edit directly since I haven't actually read the legislation. Ginahoy (talk) 02:13, 5 January 2013 (UTC)


I think much of the language in this article needs refining. There is no need to advertise sources in the text: "According to USA Today (“New rule puts a wrinkle in figuring taxes on stock sales” by Mark Krantz published February 13, 2012 page 6B)" in the History of capital gains section, "the conservative newspaper Human Events" in the Rationale section, "In an article in the Washington Post" in the Primary residence section, "According to an article in the Washington Post" also in the Primary residence section, etc.

The sources should be available in the refereces section and the text uncluttered by details that aren't relevant to the subject (i.e., what matters is what was said, not where it was said). (talk) 18:27, 30 January 2013 (UTC)

Proposals to reform the long-term term length?[edit]

I've repeatedly heard that there is some persistent effort to return the holding length for long-term capital gains to five years back from one, in the U.S. However, I can't find any reference to this in anything other than oblique mentions in blogs and other low quality sources. Does anyone have a good source? Neo Poz (talk) 03:31, 22 February 2013 (UTC)

Problem with the graphs[edit]

1. First graph has a start date of 1972 to push a certain agenda to imply the tax rate has always been declining. Ignores lower rate from 1954 to 1967. Also, is not updated to include 2013 tax rate

2. Much criticized crs study which lacks basic econometric and theoretical frameworkSabote88 (talk) 10:05, 25 February 2013 (UTC)

You don't like the one which starts at '72 because it only shows decreases, but you also don't like the one that starts in 1950 because it has growth rates on it? Whatever your problem is with the study it came from, its data is correct. Neo Poz (talk) 12:39, 25 February 2013 (UTC)

1031 exchange[edit]

I removed one sentence from the section Primary residence, as its footnote had been reported as a dead link. It described deferring capital gains tax using 1031 and laid out a strategy that did not seem much different from the strategy described in the preceding sentence.

Now about the surviving portion of the paragraph. A claim is made that use of 1031 "can avoid capital gains tax entirely," presumably by converting properties from primary residence to rentals and vice versa, but it doesn't say how. My only guess is that, by moving into a former rental property, you will not have to pay cap-gains simply because you plan never to move out. However it does it, it doesn't belong in this section, as Wikipedia says 1031 exchange doesn't apply to personal residences (nor to second homes). And this section claims to be about 26 U.S.C. §121, which the paragraph says is not available to properties acquired in a 1031. Spike-from-NH (talk) 22:30, 8 October 2015 (UTC)