capital [19] |||(August 14 2007)- The Securities and Exchange Commission of Pakistan (SECP) has

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Capital Gains Taxes and Inflation

Tue, 31 Jul 2007 00:00:00 CDT | Tax Foundation's Tax Policy Blog

Democratic presidential hopeful John Edwards recently released a plan to increase the capital gains tax rate to 28 percent. The current capital gains rate is 15 percent, so Edwards' plan would nearly double the current rate.

The preferential treatment of capital gains and dividends—both taxed at 15 percent compared to 35 percent for wage and salary income—is sure to be a hot-button issue as the presidential race continues and the Democratic Congress pushes for tax increases under the pay-go rules.

Democrats will argue for a higher tax rate on capital gains on fairness grounds, and Republicans for a lower rate based on economic growth and efficiency. While agreement on these issues is unlikely, both sides should agree that the portion of capital gains that is due solely to inflation should be removed from the tax base.

We released a paper late last year that detailed how inflation can cause the effective tax rate on capital gains to be higher than 300 percent in some years. This is because a portion of an asset's appreciated value is tied directly to a rise in the general price level.

Gains due solely to inflation hold the original value of an asset and should not be taxed, since they do not increase the asset holder's ability to consume—the standard economist's definition of income.

Indexing capital gains to inflation would improve fairness and economic efficiency in the same way indexing the individual income tax brackets has, so it should be something both parties are in favor of.

SECP issues draft of private equity fund rules

| Business, Economy and Finance News (acco

ISLAMABAD (August 14 2007)- The Securities and Exchange Commission of Pakistan (SECP) has issued the draft 'Private Equity and Venture Capital Funds (PE&VCF) Regulations 2007' meant to attract foreign direct investment and provide capital to local corporate sector for its growth and expansion. An announcement in this regard was made by SECP on Monday.

IDBI Capital to sell 26% stake

Wed, 15 Aug 2007 16:27:00 GMT | Business Standard

IDBI Capital, a wholly owned subsidiary of IDBI Ltd, is planning to sell 26 per cent stake to a strategic foreign partner to boost its institutional broking business. ??

2007 Capital Campus California Fall Retreat

Wed, 15 Aug 2007 16:34:00 EST | Tax and Fiscal Policy (mercatus.org)

Join Capital Campus for an opportunity to explore innovative ideas about California's most pressing public policy issues, September 28-30, 2007 at Lake Tahoe, California.

SBI Capital to enter commodity broking

Thu, 16 Aug 2007 14:48:29 GMT | Business Standard

India's leading investment banker SBI Capital Markets (SBICAP) plans to enter commodity broking and expand aggressively its online equity trading to take on competition from ICICI in the sector.??

JM Fin launches portfolio scheme

Thu, 16 Aug 2007 16:13:28 GMT | Business Standard

At a time when the domestic markets are volatile, a leading financial services firm has launched a portfolio management scheme that offers both capital protection and capital appreciation ? a first in

John Edwards and the War on Work

Thu, 16 Aug 2007 00:00:00 CDT | Tax Foundation's Tax Policy Blog

With a style reminiscent of Huey Long and other populists who have gushed rhetoric about the evils of capital and wealth, John Edwards has called our tax code a "war on work." Here it is in a nutshell from the Edwards08 website:

"In America, when the middle-class makes money from hard work they shouldn't pay higher taxes than when the rich make money from money."

Usually "money from money" refers to interest, but interest is already taxed the same as wages, so he must mean dividends and capital gains which are taxed at a lower rate.

So we would expect Edwards to advocate taxing dividends and capital gains as if they were wages, but he recently proposed a more detailed tax plan than any other presidential candidate, and it includes ......drum roll please ...... a 28% rate for capital gains. That's high but still lower than the rates on wages.

Why didn't he just propose taxing dividends and capital gains as wages and interest? It's hard to guess. The Edwards rhetoric on the economy has been so emotionally charged and factually challenged that it's hard to know.

Here's a recent report explaining in plain English why the U.S. has, quite sensibly, had a special, lower rate on capital gains for all but two years since 1913.

Do you have capital?

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capital [19] |||(August 14 2007)- The Securities and Exchange Commission of Pakistan (SECP) has