I'm not shocked that it failed. But taking money that would have been profit and turning it into company creation/expansion is something that is taxed lower for a reason.
To focus on "past": I don't think deferring the gains for a couple years is a big deal. It's not a handout because he'll still be paying the same taxes if he doesn't end up reinvesting the money. It just offers him some more time to set up a business, instead of having to do it same-year.
To focus on "gains": If you don't like the entire idea of reinvested money not counting as profits, oh boy that's a big objection, and it's not that way because of corruption.
Sign me up for some interest free loans then. Deferring capital gains is a huge windfall.
Reinvesting money getting special treatment provides zero benefits to the economy. It falls under the fallacy that rich people can avoid investing their fortunes, inflation already makes that a nonstarter. The only result here is a handout.
Business expenses are tax deductions because business taxes are on profits and profits are calculated as revenue minus expenses.
Taxing businesses on revenue rather than profits doesn't work because it would bankrupt every business with slim margins, which is most of them, while effectively cutting taxes for the ones with the thickest margins and creating a massive tax subsidy for vertical integration.
> It falls under the fallacy that rich people can avoid investing their fortunes, inflation already makes that a nonstarter.
If all someone cared about was avoiding inflation they could just buy a stack of precious metals. Moreover, the return from typical passive investments (e.g. S&P 500) significantly exceeds the rate of inflation.
The preference for investment is as opposed to spending. If inflation is at 3% and someone is getting a 10% return from stocks, they can avoid real value loss while still spending up to 70% of the nominal profits. But we'd rather people build factories and develop new drugs and technologies than buy second private jets and third personal mansions.
> If all someone cared about was avoiding inflation they could just buy a stack of precious metals.
Capital gains of precious metals “yield” drops you below inflation.
> But we'd rather people build factories and develop new drugs and technologies than buy second private jets and third personal mansions.
Someone needs to do that for your hypothetical 10% S&P gains. Giving handouts to wealthy people hardly discourages them using a private jet, just the opposite.
Investment is the thing where you pay a business expense today expecting a return in the future.
> Capital gains of precious metals “yield” drops you below inflation.
This is a defect in the tax code. Taxing inflation as a capital gain is ridiculous.
> Someone needs to do that for your hypothetical 10% S&P gains.
And then those companies get a tax deduction. Or in many cases they do make those returns without doing those things, because a lot of those companies have high returns by buying off regulators to constrain competition and then charging high margins to captive customers, which is another thing we don't like to promote over the ones actually making productive investments.
> Giving handouts to wealthy people hardly discourages them using a private jet, just the opposite.
The tax isn't deferred on the money used for personal consumption.
Yea, corruption. Tax breaks on past gains are just handouts and everyone wants a handout.