Capital gains taxes to shrink too?
Thursday, January 9th, 2003
While everyone focuses on the elimination of the dividend tax, it seems that capital gains taxes will also fall under Bush’s plan. The WSJ explains: “Say a share is bought for $100 and the company has $6.50 a share in fully taxed profits that year. The company will notify the shareholder of this. Then, suppose the share is sold for $110, for a $10 profit. The capital-gains tax will apply only to $3.50 of the gains ($10 minus $6.50.) Each year, a holder will be able to increase his “basis” — the cost for figuring out his gain on shares held, for tax purposes — by the amount of the company’s taxed profits.” This will be a bookkeeping nightmare for shareholders, but I guess their pain will be well compensated.