Tax News Sharing
January 31, 2013
Sanchirico: Camp’s Investment Tax Plan: Implications for Lower Rates on Capital Gains?
TaxVox Blog: Camp’s Investment Tax Plan: Implications for Lower Rates on Capital Gains?, by Chris William Sanchirico (Pennsylvania):
House Ways and Means Committee Chairman Dave Camp (R-MI) has proposed requiring most derivatives investors to pay tax on their annual returns
even if they don’t realize their gains by selling their securities.
This proposal, which requires investors to mark-to-market the value of
financial derivatives, has ramifications far beyond the heady world of
high-tech finance. It implicitly challenges our most basic and firmly
held beliefs about why we tax investment gains the way we do.
Camp’s plan raises two key questions: First, should mark-to-market be
required for all investment assets, not just derivatives? Second, does
his proposal fracture one of the main justifications for taxing long
term capital gains at roughly half the rate on ordinary income? … Camp’s proposal is more than food for thought regarding derivatives.
It’s a four-course meal for fundamentally rethinking how we tax
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