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Can reductions in capital gains taxes cause capital flight?
Posted on 10/17/08 at 12:29 am
Posted on 10/17/08 at 12:29 am
If the capital gains tax is lowered and it is perceived by the owners of equity that the reduction will be only temporary - a year or two - wouldn't that actually encourage capital flight instead of discouraging it? It would at least encourage wash sales.
Wouldn't people want to hold equity during periods where the tax is high - and then liquidate it during periods when the tax is low?
Wouldn't people want to hold equity during periods where the tax is high - and then liquidate it during periods when the tax is low?
This post was edited on 10/17/08 at 12:30 am
Posted on 10/17/08 at 7:36 am to MeanMachine
i don't know, but i accidentally had a wash sale this week....pissed me off... still slightly confused about it too....need to find some time to do more homework
Posted on 10/17/08 at 8:32 am to MeanMachine
temporary? yeah. See The Mitchell Recession.
Posted on 10/17/08 at 10:56 am to MeanMachine
so lower the capital gains tax for a longer period of time before it expires.
If someone knew the tax was going to be low for say 15 years, would that offset it?
If someone knew the tax was going to be low for say 15 years, would that offset it?
Posted on 10/17/08 at 11:12 am to Zilla
quote:
i don't know, but i accidentally had a wash sale this week....pissed me off... still slightly confused about it too....need to find some time to do more homework
a wash sale is when you sell a stock at a loss, and then re establish your position in the stock within 30 days.
the reason for this rule is to prevent the generation of losses without really changing your position in the stock.
Posted on 10/17/08 at 11:21 am to simonizer
yea, I got that part of it, but I'm trying to figure out my new cost basis and what to do at this point in terms of buying or selling the stock again...i actually want to buy some more of it but trying to decide if want to due to the imposed cost basis
Posted on 10/17/08 at 11:29 am to Zilla
i'm afraid i dont understand your question then. any loss disallowed due to a wash sale is added to your cost basis of the stock you re-buy.
Posted on 10/17/08 at 11:36 am to simonizer
well, i may not have a question then... i guess im just trying to wrap my brain around it...i guess my loss that im showing on the shares i actively owned are just the loss that I already realized
Posted on 10/17/08 at 11:44 am to MeanMachine
Historically reductions in the capital gains rates have triggered people to sell capital assets and redeploy their capital to new investments that they perceive will have better returns than the assets sold. The reductions in capital gains rates make domestic investment opportunities more attractive. The rresultant redeployment of capital often results in rapid economic growth as many of the new investments provided the necessary capital for business expansion and new business development. And th
Americans have historically not moved their capital overseas due to repatriation issues, and they perceived domestic investment opportunities were superior. Reducing the capital gains rate makes the domestic investment opportunities even more attractive. So it is unlikely that reducing capital gains rates will result in capital flight.
Americans have historically not moved their capital overseas due to repatriation issues, and they perceived domestic investment opportunities were superior. Reducing the capital gains rate makes the domestic investment opportunities even more attractive. So it is unlikely that reducing capital gains rates will result in capital flight.
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