I love Thomas Sowell. Just when I think I've become too cynical to care about politics any longer, he writes a column that just infuriates me, and reminds me why this country needs to be abandon capitalism altogether. Capital gains should be taxed at a reduced rate because the (wealthy) investor is risking his money?? Sowell uses several well-picked examples to involve actual labor in creating the capital gain, but in reality, most capital gains are the result of a rich guy calling his broker. He actually empathizes with the investor because he was "brave" enough to try make more money for himself. And he demonizes the worker who slaved to make his meager earnings, because, afterall, his earnings were "guaranteed".
One of the many false talking points of the Obama administration is that a rich man like Warren Buffett should not be paying a lower tax rate than his secretary. But anyone whose earnings come from capital gains usually pays a lower tax rate.
How are capital gains different from ordinary income?
Ordinary income is usually guaranteed. If you work a certain amount of time, you are legally entitled to the pay that you were offered when you took the job. Capital gains involve risk. They are not guaranteed. You can invest your money and lose it all. Moreover, the year...
They invest through their 401k plans, or though their company retirement plan, or by directly buying stock.
You don't have to be rich to invest.
And every one of these plans, when they show a profit, will be subject to a CGT.
And the CGT RATE is the same for ALL investors.