Letters to the Editor

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TAXES: Capital gains are profit, not income

Letter by Teresa A. Hoyer, University Place on Feb. 6, 2012 at 1:32 pm | 7 Comments »
February 6, 2012 2:28 pm

Re: “Baird’s naive about tax rates” (letter, 2-4).

The writer sees capital gains as income, but they are actually profit. Yes, some people invest using ordinary income received as wages, which they have already paid tax on. The capital gain on these investments (dividends, etc.) is not taxed twice; it is profit, which has never been taxed.

Taxpayers who lose money on investments are allowed to declare a loss on their tax returns because the loss is viewed as lost profit, not lost income.

Many people invest with money they don’t receive as ordinary income or wages, especially the very rich. As one example, compensation packages for CEOs are weighted so most of their income is from stock options (investments), not wages. This allows them to pay a much lower overall tax rate.

The “twice-taxed income” idea promulgated by Republicans as justification for the unfair tax code is a lie.

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