What is the correct capital gains tax rate?
Seems sensible. I remember when W reduced capital gains rates. I think they used to be closer.
Corporations pay taxes on profit. Shareholders pay taxes on dividends and capital gains.
Shouldn't we also not do that?
Suppose you pay a 25% income tax and then a 10% sales tax. You're paying the same amount, almost a third of your income, as you would with a 47% sales tax. Which to begin with misleads people into thinking their rate is lower than it is, and on top of that incurs the significant overhead of needing two independent collection infrastructures.
Why isn't it better to just pick one?
No, I don't, because I don't spend 100% of my income every year on income-tax applicable goods. A good chunk of my income, even that which is taxed with income tax, goes to other things (like my mortgage, other investments, groceries, savings accounts, charitable donations, etc.) that either defer paying sales taxes or have no sales tax applied.
Meanwhile other purchases have extra sales taxes applied such a liquor or hospitality taxes.
Think for a second. What kind of household spends every penny they make? Which one maybe manages to toss some money into savings every month? Which one doesn't even come close to spending their income?
Which household here pays the highest effective tax rate?
You're still designing a system where the highest effective tax rates are paid by the lowest income people and the lowest effective tax rates are paid by the highest income people. You've pointed to nothing that changes this truth.
Caps that are set to the amounts where people start having enough money to hire a tax accountant and thereby use the various other ways of deferring income tax on money you're not immediately spending.
> You're still designing a system where the highest effective tax rates are paid by the lowest income people and the lowest effective tax rates are paid by the highest income people.
The status quo is even worse: They not only defer income tax on the money they're not spending, they defer it on money they are spending, by borrowing against the assets and spending the loan. Which a consumption tax would have them paying.
Meanwhile you can exempt necessities from a consumption tax to various degrees or issue a large fixed tax credit to everyone, which lowers the effective rate on ordinary people by as much as you like.
> Meanwhile you can exempt necessities from a consumption tax to various degrees
So, a non-uniform sales tax. So not the thing you were arguing for just a few comments ago.