After reading John Cook's article from Oct. 23, I decided to look into why the capital gains tax even exists. It virtually began with the Tax Act of 1921. It did not become the biggest fraud in history until the "Tax Payers Relief Act of 1997." President George W. Bush signed the "Economic Growth and Reconciliation Tax Relief Act of 2003" and in 2010 President Obama extended it to 2012.
The main "fly in the ointment" is that short-term gains were described as one day and long-term gains were described as two days, now one year.
The fraud started when the successful corporate giants made huge profits. Instead of paying dividends, the CEOs and directors paid themselves $1 million salaries, then issued themselves 20,000 shares of stock, waited a year, sold it, paid a 15 percent capital gains tax and became instant millionaires or billionaires.
The problem is that "long term should be long term," not one year. I can see the need for a long-term tax break for a farmer who bought a farm, farmed it for 20 years, sold it for a profit, and had to pay a 35 percent tax with no allowance for inflation.
|The logical solution would be to allow 2 percent off the 35 percent rate for each year the capital was held, whether dividends, stock, farmland or a business. If held for 10 years he or she would pay only 15 percent. If he held it 18 years, no capital gains tax.|
JACK H. KNOWLAN SR., Jackson