Raising Capital Gains Tax

Legislative Change in the U.S: Raising Capital Gains Tax

Name: Tu Dang

City University of Seattle

Course: BSC 403 Legal Issue in the Workplace

Legislative Change in the U.S: Raising Capital Gains Tax

Introduction

A capital gain is an investment income that is realized after disposition of assets such as stock, bonds and real estate where the profit gained is usually higher than the initial purchase price. Capital gains tax is the government levy incurred after a capital gain on an individual’s assets. Mostly, capital assets reap huge profits compared to the ordinary assets; however, their tax rate is usually low. Moore (2008) states that capital gains in the United States have a lot of controversies since they bring very little revenue to the federal government through taxation. Most of the business people who accrue capital gain tax belong to the rich and upper class people but surprisingly they contribute very little in terms of taxation. Therefore, the United States federal government should raise the tax levied on capital gains to increase the country’s revenue.

Why the Capital Gain Tax Should be Increased

Capital gains taxation has received a lot of attention recently as opposed to dividend taxation that has been studied for a long time (Shacklelford, 2014). This is because taxation is intended to raise the government’s revenue to enable the state to facilitate its expenditures. Any investor who belongs to the top bracket taxation of 10% or 15% qualifies to 0% taxation making them tax free (Lasser, 2012). On the contrary, the United States constitution provides that every individual is liable to taxation to foster the economy growth. In this case, small businesses are subjected to a 28% tax rate from their sales (Lasser, 2012). Capital gains are form of income that is realized by investing and not working manually and it is unfortunate that wages are taxed progressively while capital gains avoid taxation. For instance, in the year 2003...