[endisneigh]

I don’t think you understand how capital gains work...

If you invest a dollar today and get ten dollars tomorrow you’ve gained 9 dollars. When were you taxed for that?

[procombo]

They're saying if that growth occured over 60 years then you've just kept up with inflation. Might as well have just put it in a standard savings account and NOT get capital gains tax. *Well, maybe a standard money market account or bond.

[medvezhenok]

Bonds also incur capital gains tax) The point of the capital gains taxes/inflation is specifically to incentivize people spending money over saving (if too many people saved money the economy would contract). It's not a perfect tool, but it works somewhat.

[procombo]

Income from bonds issued by the federal government and its agencies, including Treasury securities, is generally exempt from state and local taxes.

[tartoran]

Wait, wouldn't you get taxed capital gains on a standard savings account? I'm genuinely curious even though right now saving accounts are not saving anything at all.

[leephillips]

Tax on interest is at a different rate than capital gains tax.

[tartoran]

Which one is higher?

[leephillips]

I’m pretty sure that interest income is taxed, at the federal level, like wage income. In other words, at a higher rate than capital gains.

[loeg]

Long-term capital gains are taxed at a lower rate than ordinary income and short-term capital gains (which are taxed at income rates).

[gizmo686]

Earned interest is taxed as income at the federal level.

[procombo]

Oh, I know. Should it be taxed at the state level too?

[enahs-sf]

I think his point was the initial dollar you invested was at some point subject to income tax to get it.

[Jtsummers]

The (now gray) comment talks about being double taxed. That is, taxed twice for the same money.

If I invest $100 (post-tax money) and sell the investment at $1000, I do not pay taxes on that $100. There is no double taxing. I do pay taxes on the $900 gain.

[medvezhenok]

The double taxation that some people talk about is actually corporate profits being taxed, and then that money being further taxed as capital gains / dividends - but I don't think that 's a fair criticism either.

[foobiekr]

The problem is the gain may exist in nominal terms only. It’s possible to make a 100% nominal gain, which will be taxed, even if in inflation adjusted terms you lost 90% of the actual value in the process.

[ska]

Yes, but the capital gains tax doesn't apply to that dollar (it's right in the name).

There is no double taxation here.

There is a more nuanced question as to whether or not inflation should be incorporated into the calculations, but there are pros and cons there also.

[arrosenberg]

That’s a bad point, because the first dollar won’t be subject to cap gains, so there is no double taxation happening.