IRS’s income averaging provisions are a superior tax policy.
Reduced tax rates for long term capital gains, (i.e. LTCG) are unjustified.
I’m a proponent for not limiting the income sources eligible for income averaging tax treatment and eliminating the LTCGs’ extreme tax rate reductions. Commercial LTCGs in particular should be treated as regular incomes.
IRS’s income tax averaging provisions were an intelligent mitigation of progressive tax rates’ excesses. Income averaging is a transparent and equitable mitigation of progressive tax rates’ most excessive wrongs, rather than a boon to the wealthier pretending to promote investing.
I wasn’t aware that ranchers, farmers and fishers can still elect to file income averaging tax returns.
[As I recall the taxpayer’s current taxable income required qualifying proportional increase over their prior year’s taxable incomes to be eligible for income averaging. Taxpayers’ choosing to file a tax averaging return are in effect amending their annual taxable incomes for each of a current and the prior 2 years. Electing to income average does not modify the income brackets’ tax rates or any other regulations that were in effect during any particular year but each of the current and prior 2 year’s taxable incomes are equal to their average income within the entire 3 years].
LTCG reduced tax rates are applied upon net profits due to sales of assets (not stock in trade), that was owned by the seller for 12 months or more.
Income averaging was not limited to the net profits due to the sale of qualified assets. It could benefit investors and ex-homeowners but it also benefitted lottery or quiz program winners, sport or entertainment figures, inventors or anyone else that hit any financial jackpot within the taxable year they filed an income averaging tax return.
Within the referred Wall Street Journal of July 3, 20212, Tom Herman quotes a Professor Schmalbeck,
“..“a Duke University law professor”…” The income-averaging law was repealed as part of the 1986 tax act, which greatly reduced the number of income-tax rates and made many other changes …
…lawmakers concluded income averaging wasn't necessary since the 1986 tax act contained a much flatter tax-rate structure, including a much lower top rate. Also, elimination of income averaging "added several billions of dollars of revenue [to the Treasury's coffers] that would otherwise have been lost."
The professor’s quote indicated no concern for tax revenue losses due to long term capital gains excessive tax rate discounts. By eliminated tax averaging and retained the long term capital gains’ tax reductions, we threw out the baby and kept the dirty water.
If it’s politically unfeasible to eliminate the LTCG tax reductions due to the sale of unreplaced primary residences, then the extent of such severely reduced tax revenues should at least be capped. That cap should be annually indexed to the U.S. dollar’s purchasing power. Our federal budget should not subsidize mansions.
The net consequences of this policy would be to shield ALL U.S. resident taxpayers from progressive tax rates’ excesses applied to their proportionally unusual increase of annual taxable incomes; regardless of the incomes’ sources. It would replace our current policy that deems profits due to the sale or trade of assets held for 12 months or more are of economically superior benefit to our nation and should not be held to any common tax standard.
I’m opposed to special strokes for special folks. I approve of equitable treatment for all, increased tax revenues and reduced federal budget deficits.
Refer to:
http://online.wsj.com/article/SB10001424052702304490004576422490764070086.html#articleTabs=article
Respectfully, Supposn
Reduced tax rates for long term capital gains, (i.e. LTCG) are unjustified.
I’m a proponent for not limiting the income sources eligible for income averaging tax treatment and eliminating the LTCGs’ extreme tax rate reductions. Commercial LTCGs in particular should be treated as regular incomes.
IRS’s income tax averaging provisions were an intelligent mitigation of progressive tax rates’ excesses. Income averaging is a transparent and equitable mitigation of progressive tax rates’ most excessive wrongs, rather than a boon to the wealthier pretending to promote investing.
I wasn’t aware that ranchers, farmers and fishers can still elect to file income averaging tax returns.
[As I recall the taxpayer’s current taxable income required qualifying proportional increase over their prior year’s taxable incomes to be eligible for income averaging. Taxpayers’ choosing to file a tax averaging return are in effect amending their annual taxable incomes for each of a current and the prior 2 years. Electing to income average does not modify the income brackets’ tax rates or any other regulations that were in effect during any particular year but each of the current and prior 2 year’s taxable incomes are equal to their average income within the entire 3 years].
LTCG reduced tax rates are applied upon net profits due to sales of assets (not stock in trade), that was owned by the seller for 12 months or more.
Income averaging was not limited to the net profits due to the sale of qualified assets. It could benefit investors and ex-homeowners but it also benefitted lottery or quiz program winners, sport or entertainment figures, inventors or anyone else that hit any financial jackpot within the taxable year they filed an income averaging tax return.
Within the referred Wall Street Journal of July 3, 20212, Tom Herman quotes a Professor Schmalbeck,
“..“a Duke University law professor”…” The income-averaging law was repealed as part of the 1986 tax act, which greatly reduced the number of income-tax rates and made many other changes …
…lawmakers concluded income averaging wasn't necessary since the 1986 tax act contained a much flatter tax-rate structure, including a much lower top rate. Also, elimination of income averaging "added several billions of dollars of revenue [to the Treasury's coffers] that would otherwise have been lost."
The professor’s quote indicated no concern for tax revenue losses due to long term capital gains excessive tax rate discounts. By eliminated tax averaging and retained the long term capital gains’ tax reductions, we threw out the baby and kept the dirty water.
If it’s politically unfeasible to eliminate the LTCG tax reductions due to the sale of unreplaced primary residences, then the extent of such severely reduced tax revenues should at least be capped. That cap should be annually indexed to the U.S. dollar’s purchasing power. Our federal budget should not subsidize mansions.
The net consequences of this policy would be to shield ALL U.S. resident taxpayers from progressive tax rates’ excesses applied to their proportionally unusual increase of annual taxable incomes; regardless of the incomes’ sources. It would replace our current policy that deems profits due to the sale or trade of assets held for 12 months or more are of economically superior benefit to our nation and should not be held to any common tax standard.
I’m opposed to special strokes for special folks. I approve of equitable treatment for all, increased tax revenues and reduced federal budget deficits.
Refer to:
http://online.wsj.com/article/SB10001424052702304490004576422490764070086.html#articleTabs=article
Respectfully, Supposn