Resolved: The United States should abolish the capital gains tax. - The Best Online Debate Website | DebateIsland.com The Best Online Debate Website | DebateIsland.com
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Resolved: The United States should abolish the capital gains tax.

Opening Argument

Position: For
I will take Affirmative position that The United States should abolish the capital gains tax.
As per his request, I challenge @WhyTrump to this formal 1-1 debate.  

The primary benefits will be

  1. Abolishment of Capital Gain Tax will drive Economic growth - since it encourages investment and higher risk taking, consumers should expect people to actually spend vs saving money
  2. Abolishment of Capital Gain Tax will improve Society well being - capital gains tax is an inefficient form of taxation to be applied towards public well being (like improving transportation or building hospitals).  The cost of collecting this tax is also high since there is complex administrative overhead involved.
Rules and Definitions:
We will debate that capital gain tax should be eliminated, but not replaced with another form of tax.

Resources:

Pro - The United States should abolish the capital gains tax.

COLUMN: Corporate taxes should be abolished

Wicked Local Cambridge-Jan 19, 2018
Finally with the abolition of corporate taxes, the strongest rationale for a lower tax rate for capital gains vanishes. It is argued that because corporate income has been taxed, the gains generated are lower than they would have been absent the corporate tax, therefore the gain should be taxed at a lower rate.

Taxing Long-Term Capital Gains: Opportunism Wrapped In Principle

BloombergQuint-Feb 4, 2018
I propose to abolish the tax on long-term capital gains from securities transactions altogether. Instead, I propose to levy a small tax on transactions in securities on stock exchanges… In the case of short-term capital gains from securities, I propose to reduce the rate of tax to a flat rate of 10 percent.

It's Time to Cut the US Corporate Tax Rate - Foundation for ...
It's Time to Cut the US Corporate Tax Rate - Foundation for Economic Education - Working for a free and prosperous world

Con - The United States shouldn't abolish the capital gains tax.

Modi Brings Back Long-Term Tax on Stock Gain to Lift Revenue

Bloomberg-Feb 1, 2018
“There are many countries who have had very successful capital gains regimes with significant degree of compliance and at much higher rate. ... India in July 2004 abolished long-term capital gain tax on shares and replaced it with the securities transaction tax, a same-day tax credit system that's easy to ...
joecavalry
  1. Resolved: The United States should abolish the capital gains tax.

    7 votes
    1. Yes
      71.43%
    2. No
      28.57%
Live Long and Prosper



Debra AI Prediction

Tie
Predicted
50%
Likely
50%
Unlikely

Details +


For:

50% (41 Points)


Against:

50% (41 Points)



Votes: 6


Debate Type: Traditional Debate



Voting Format: Casual Voting

Opponent: WhyTrump

Rounds: 2

Time Per Round: 4 Hours Per Round


Round 1

Round 2

Voting


Arguments



  • Round 1 | Position: Against
    Thanks @agsr for agreeing to debate with me 1-1 on this topics for abolishing US tax gain tax, as a carry over from our other casual debate. 

    I will argue negative side of this position.  Capital gain tax is a fair practice and it's not double taxation.  
    Abolishing capital gain tax will not serve any purpose in the United States and will result in decrease in net tax revenue.

    This article argues why progressive income redistribution is advisable to resolve inequality in the United States. If the United States abolishes Capital Gain tax - the benefit of economic growth won’t benefit the poor in a meaningful way, but would just be a change for sake of change.
    Why stopping tax reform won’t stop inequality.  

    The United States should increase the taxes for the high-income population. 
    Please see the article below.
    https://theconcourse.deadspin.com/we-need-to-tax-the-rich-but-instead-well-do-the-opposit-1790982273

    Eliminating capital gain tax will have an opposite affect.

    Finally, low capital gain tax really provides unfair benefit to the rich, ans that is not something an effective taxation system should aim at.
    https://www.americanprogress.org/issues/general/news/2011/02/23/9163/tax-expenditure-of-the-week-capital-gains/

    Look forward to your response.

    WhyTrump - a good question
  • Round 1 | Position: For
    You provided a few arguments, that I will refute below

    Your first article is arguing the point of inequality.
    "In sum, in the short to medium run, regressive Republican tax reductions would have barely visible macroeconomic effects while providing an income fillip at the top. In the longer run, the weight of the debt burden could rise".  
    You assume that income equality is a goal, but I don't agree.  We are a capitalist society and our goal is overall optimization.  If the debate would have been about Communist China than the goal would be a valid honorable target.

    Your second article focuses on the unfairness to the rich vs poor as well.

    "The benefits of preferential rates for capital gains are enjoyed by the wealthiest Americans because they’re the ones who tend to receive this type of income. More than 70 percent of the benefit goes to taxpayers with annual income of more than $1 million, a group that comprises only about 0.3 percent of all taxpayers.

    Our income tax system is designed to be “progressive.” That is, we generally agree that people with higher incomes should pay a greater percentage of their income in federal income taxes, because they can afford to pay more. But because capital gains are concentrated at the highest levels of income and taxed at favorable rates, many of the most affluent taxpayers pay a lower effective tax rate than those beneath them on the income scale."

    My counterpoint is that unless you can demonstrate that benefiting the affluent population is economically a detrimental thing to do then we are back to the noble cause of rich vs poor instead of a meaningful debate on the actual topic.

    Your third point is that capital gain isn't a double taxation.  I respectfully disagree.

     http://www.taxanalysts.org/tax-analysts-blog/are-capital-gains-double-taxed/2011/10/12/169496

    Please see 3 reasons why it is, as explained in the article in more depth.

    1) All taxation of saving is a form of double taxation. This observation is nothing new to economists. For example, in 1848 the British philosopher and economist John Stuart Mill wrote: "Unless . . . savings are exempt from tax, the contributors are taxed twice on what they save, and only once on what they spend." Since then, economists have often said things like "income from saving is taxed twice." This is another way of saying an income tax is biased against saving -- a bias not shared by a consumption tax.


    2) Profits giving rise to capital gain on equities have already been subject to corporate tax. There is no good economic justification for the corporate tax. It is unfair and inefficient to tax profits first with the corporate tax and then again with an individual tax either on dividends or capital gains.

    Corporate taxes can substantially raise the overall effective tax rate on capital gains (as we shall see in the table). Republicans would like to highlight this fact, but it assumes that the entire burden of the corporate tax falls on shareholders. This would contradict the position Republicans take when they argue for a corporate rate reduction -- that is, most of the burden of the corporate tax falls on workers (in the form of lower wages).

    3) Inflationary gains are not real income and should not be subject to tax. The relative stability of the price level over the past three decades has greatly reduced concerns about the highly detrimental effects of inflation on the operation of the income tax. But even at low levels, inflation overstates returns to capital. One manifestation of this problem is the taxation of inflationary gains as if they represented appreciation in real value.
    Live Long and Prosper
  • Round 2 | Position: Against
    @agsr
    fair taxation should be a goal of any tax system.  If tax law skews against the poor and towards the rich, that is unfair in any society.  Your contention that it makes it communism is unfounded.

    Capital gain tax isn't double taxation.  
    Please see why your argument doesn't hold.

    The capital gains tax is NOT a tax on income already taxed, it’s a tax on the ADDITIONAL income you earn by investing that income.  For example:

    • You earn $100,000.  Yay!
    • You are taxed 35% on it.  Boo!
    • You invest the remaining $65,000, you do well, and you double it!  Yay!
    • You now have $130,000 in the bank.  You are taxed 15% for the capital gains, i.e., the $65,000 you made.  You pay $9,750.

    So again, to be clear, you are ONLY taxed on the additional money you made.   There is no double dipping.  It’s no different from getting taxed in one paycheck, and then getting taxed the next week, for a completely new paycheck.  Except in this case, the second round of taxes comes at a 15% rate, which is pretty sweet, compared to the 35% you paid earlier.

    Source: https://hlinkoreport.com/2012/12/09/no-the-capital-gains-tax-is-not-taxing-the-same-income-twice/

    WhyTrump - a good question
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