If an investor makes money one year then loses it later, we should give them their taxes back.
If we don’t allow carrying forward losses this puts people who are just starting to invest at a serious disadvantage.
If you can immediately offset all your losses such tax basically feels like the government de-levereging you (taking a percentage of all gains and losses). I.e. you can get the same outcome as without the tax by investing 11−taxrate times more.
If, on the other hand you lose before you have gains (and we don’t allow carry-forward) you lose 100% of what you lost.
If you can immediately offset all your losses such tax basically feels like the government de-levereging you (taking a percentage of all gains and losses). I.e. you can get the same outcome as without the tax by investing 11−taxrate times more.
Hmmm… yeah, but you could have made it in other ways, which might or might not be possible to offset, e.g.:
Employment income
Having some money after moving from another country
Gifts, inheritance etc.
I previously assumed that you can only offset capital losses against past capital gains.
BTW if you allow offsetting against any kind of income then you get another issue – all of the people who are really bad at investing consistently decrease their tax bills by their capital gains losses. Not sure how big a deal is that. Or perhaps that’s a feature?
If we don’t allow carrying forward losses this puts people who are just starting to invest at a serious disadvantage.
If you can immediately offset all your losses such tax basically feels like the government de-levereging you (taking a percentage of all gains and losses). I.e. you can get the same outcome as without the tax by investing 11−taxrate times more.
If, on the other hand you lose before you have gains (and we don’t allow carry-forward) you lose 100% of what you lost.
Yeah, that’s the hope.
I’m imagining everyone gets the money back. In order to lose money you have to made it, right?
Hmmm… yeah, but you could have made it in other ways, which might or might not be possible to offset, e.g.:
Employment income
Having some money after moving from another country
Gifts, inheritance etc.
I previously assumed that you can only offset capital losses against past capital gains.
BTW if you allow offsetting against any kind of income then you get another issue – all of the people who are really bad at investing consistently decrease their tax bills by their capital gains losses. Not sure how big a deal is that. Or perhaps that’s a feature?