Local Stories, Events
Ref. : Civic Events
Ref. : Arts & Education Events
Ref. : Public Service Notices
Books, Films, Arts & Education
Ref. : Letters to the editor
Health Care & Environment
02.16 Toxic black snow covers Siberian coalmining region [0:49 video; If its killing us, stop doing it]
02.16 Renewable energy will be world's main power source by 2040, says BP [But in America's capitalistic bubble, bribed-to-be-biased media and government defy reality]
02.16 What the pesticides in our urine tell us about organic food [What does inaction tell us about capitalism and our government?]
02.14 Exposure to Glyphosate-Based Herbicides and Risk for Non-Hodgkin Lymphoma: A Meta-Analysis and Supporting Evidence [If its killing us, make it illegal]
02.14 To avoid environmental catastrophe, everything must change [Consider why this headline is laughable or confusing to many, if not most, Americans...]02.13 Study Shows Toxic Pesticide Levels in Families Dropped by 60% After One-Week Organic Diet [2:10 video; Produce and canned vegetables laced with toxic chemicals—from fertilizers and herbicides, too—must be quickly phased out to use safe organic alternatives]
News Media Matters
02.16 We Shouldn't Stick Our Heads In The Sand, But We Do It Anyway [26:46 audio; Fear like Trump & Fox News incite makes us avoid unpleasant information we need to know]
02.15 Samantha Bee: Fox News 'soiling themselves over the Green New Deal' [video clips from Samantha Bee, Seth Meyers and Stephen Colbert]
US Politics, Policy & 'Culture'
02.20 ‘Sustained and ongoing’ disinformation assault targets Dem presidential candidates [If you can sense them, block them!]
02.18 Dictator Trump
02.20 Despite the slaughter in Yemen, Britain is still chasing arms sales [and the Great-Again-America is too...Capitalism without morality is horrible]
Economics & Corrupting-Capitalism
02.13 The Green New Deal offers radical environmental and economic change [For the survival of life on earth, capitalism must be effectively regulated or banned]
02.12 Climate and economic risks 'threaten 2008-style systemic collapse' [Willfull ignorance of Trump, Republicans, corporate-media and corporate-Democrats is steadfast, if not worsening]
02.11 Trump offers socialism for the rich, capitalism for everyone else [and the poor will die out like the insects]
International & Futurism
02.20 House report lays bare White House feud over Saudi nuclear push [Its hard to keep up with all the criminal crap going on...]
02.18 Hate-Fest in Warsaw
A Tax Break Nobody Needs
Wednesday, 8 September 2010
It's time to disallow writing off stock market losses against ordinary income. There’s no defense for a tax break so skewed toward the affluent, especially one as gratuitous as this.
Cutting the federal deficit is a hot topic on Capitol Hill, and some kind of action seems certain. Congress is about to take up taxes for the first time in President Obama’s term (including the expiration of the Bush tax cuts), and a report from the President’s national debt commission is expected come December. Both bodies should take a hard look at ending a needless tax break; getting rid of it would raise billions, and make the Tax Code a touch fairer in the bargain.
This little-remarked giveaway is the write-off which the IRS allows every year for stock market losses: when net losses exceed gains, taxable income can be reduced by up to $3,000. This is “I-want-it-now” tax law, and it turns a private loss into a hurry-up claim on the public purse. With the deficit soaring, it richly deserves repeal.
The same as now, capital losses could be written off dollar-for-dollar against capital gains. The same as now, losses could be carried forward indefinitely until they were wiped out. What the repeal would disallow is writing off stock market losses against ordinary income (which, as we shall see, was poor policy in the first place).
It makes much more sense to balance capital losses against capital gains, and leave earned income out of the equation.
Let’s quickly take a look at who gains from this special write-off, and who pays for it. Then let’s look at the hefty inflow to the Treasury if the write-off were written off for good.
Roughly half of all Americans own no stocks, so losses in the market offer no tax advantages to them. While it’s true that more people than ever do own stocks, most have their holdings in tax-sheltered retirement accounts; the write-off doesn’t help them, either. It turns out that the benefits flow entirely to a privileged minority: those well-off enough to have non-retirement investment portfolios. There’s no defense for a tax break so skewed toward the affluent, especially one as gratuitous as this.
And who picks up the tab? Like any other tax deduction, it’s paid for by taxpayers in the aggregate; in this case, the many pony up to benefit the few. Far better for the Treasury, and better for tax fairness, if Congress shows some spine and calls a halt.
The result would be an annual drop in tax expenditures (the revenue the government foregoes via the tax breaks it hands out), and a corresponding uptick in Treasury receipts. Year after year, the deficit would be that much less. Nobody can predict Wall Street’s ups and downs, or individual investors’ either, so the actual numbers could vary widely. All the same, the market’s slump in 2008 and the first half of this year have almost certainly front-loaded the benefits of a repeal.
Portfolio values sank by the hundreds of billions during the sell-off; year-end figures showed that investors took a total hit of $6.8 trillion in 2008. Of course not all the losses were realized, and stocks went on to rally sharply for most of 2009. But by mid-year 2010 the markets had once again soured, and the major indices were nowhere near their former levels. So while it’s impossible to know hard numbers, it’s a safe bet that on-the-books losses hover near a record high.
Which means it’s an opportune time to disallow writing off those losses against ordinary income. It serves no purpose, the money goes to people who scarcely need it, and it’s an annual drag on the Treasury; the sooner it’s repealed the better for the federal deficit.
And everybody cares about cutting the deficit, right?
Gerald E. Scorse, who writes from New York City helped pass a bill that tightens the rules for reporting capital gains.
Mr. Scorse's stories are republished in the Baltimore Chronicle with permission of the author.
Copyright © 2010 The Baltimore News Network. All rights reserved.
Republication or redistribution of Baltimore Chronicle content is expressly prohibited without their prior written consent.
Baltimore News Network, Inc., sponsor of this web site, is a nonprofit organization and does not make political endorsements. The opinions expressed in stories posted on this web site are the authors' own.This story was published on September 8, 2010.