Posts Tagged ‘capital gains’

You Could Owe Capital Gains Taxes When You Spend Bitcoin

The IRS determined this week that Bitcoin and other digital currencies should be taxed as property, not currency. This means Bitcoin transactions will be taxed as capital gains, not as ordinary income. But, perhaps surprisingly, the act of spending Bitcoin could trigger capital gains taxes. Thus, the use of virtual currencies as a medium of […]

Court of Appeals Finds a Trade or Business: Could this Mean Higher Taxes for Private Equity?

The First Circuit U.S. Court of Appeals ruled yesterday that private equity funds are engaged in a trade or business under the Employee Retirement Income Security Act (ERISA).  The court said the case, Sun Capital Partners v. New England Teamsters & Trucking, “presented important issues of first impression.”   And the court’s resolution of the trade […]

Do Private Equity Firms and their Partners Owe Ordinary Income Tax Under Today’s Law?

For a decade, Congress has been debating how to tax managers of private equity firms. The argument is pretty familiar to tax wonks: Should these partners treat this compensation (commonly called carried interest) as capital gains, as they do today? Or should they be taxed at the higher ordinary income rate as President Obama and […]

“Common Sense” Aside, What Do We Really Know About Capital Income Taxes and Growth?

If you’re discussing tax policy with someone who asserts that his or her point is “just common sense,” this could indicate one of two things: Either no deep thought is required—as the person would have you believe. Or no deep thought has been applied. The “common sense” notion that capital income taxes hinder growth seems […]

Chairman Camp Agrees: Too Many Choices Burden our Tax System

Last week’s draft plan by House Ways & Means Committee Chair Dave Camp (R-MI) to reform the taxation of financial products includes two key changes that would simplify rules, reduce manipulation, minimize compliance burdens, and improve tax administration. The first would require investors to use the “mark-to-market” method of accounting for all derivatives, other than […]

Paying Taxes on Capital Gains Early: How Investors are Avoiding Tax Hikes

Normally, at the end of each year, investors sell stock (and other assets) to recognize losses to offset gains recognized earlier in the year. Sometimes they do it the other way around, harvesting gains that can be offset by earlier losses. But this year is different: many investors are recognizing gains, even if they don’t […]

Can Congress Raise Taxes on the Rich without Raising Their Rates? Maybe

At his press conference yesterday, President Obama said it is nearly impossible to raise taxes on the wealthy (a key piece of his fiscal strategy) without increasing their tax rates. It is, Obama said, a matter of simple arithmetic.   But a look at some very rough numbers suggests that if the president and congressional […]

The Ten Biggest Differences between the Romney and Obama Tax Plans

When it comes to taxes, Mitt Romney and Barack Obama are almost perfect mirror images of one another. Here are ten ways their tax plans are different. Romney’s tax agenda is ambitious and opaque. Obama’s is modest but relatively transparent. Obama has shown little interest in broad-based tax reform. Romney wants to fundamentally rewrite the […]

Marginal Tax Rates Matter More than Average Tax Rates

Each year when I complete my federal income tax return, Turbotax tells me my average tax rate—how much tax I owe measured as a percentage of my total income. But it would be better if I learned my marginal tax rate or MTR—the percentage tax that I would pay on an additional dollar of income. […]

Understanding TPC’s Analysis of Governor Romney’s Tax Plan

The Tax Policy Center’s latest research report went viral last week, drawing attention in the presidential campaign and sparking a constructive discussion of the practical challenges of tax reform. Unfortunately, the response has also included some unwarranted inferences from one side and unwarranted vitriol from the other, distracting from the fundamental message of the study: […]