re: #372 cliffster

That just doesn’t make sense. An investment is either worth making or not, based on risk vs reward. The more you tax the reward, the more investments are necessarily going to be mathematically not worth the risk.

Well, you’re ignoring that one can offset capital losses, for one thing. But we do give huge, huge tax breaks to investment already— capital gains tax are half what income tax are. That means if I do work with my hands and my mind that’s worth a million dollars, I pay more tax on it than someone who sat on his ass and day-trades his way to a million dollars. That part really does annoy me on a basic level.

But speaking purely economically: There is an inherent risk in uninvested money, that being inflation. Money that is not invested, that is not working to provide profit, is always losing value. You can always be certain of that. This is why people invest their money, when they feel too unsure of the risk-reward from stocks, in bonds; government bonds, at that. The mathematical proportion that taxation plays certainly has a factor, but it is nowhere near as large— and is much better defined— than the inherent risk of investment itself.

There really are not a lot of risky investors out there, and those who are, generally make good use of the hedging provided to them by capital loss rules.