The Capital Gains Blog

Posts Tagged ‘capital gains tax meaning’

Question: What does “Reduce income and capital gains marginal tax rates” mean?

I’m studying for a final and one of the things on it is Reagan’s economic policy, which includes the quote above. I don’t really understand this at all; I don’t know if it’s the phrasing or what… Can anybody help me out?

Answer: It means that he reduced tax rates so taxpayers got to keep more of their own income and paid less in taxes. In theory, this type of move is believed to stimulate the economy by providing more money for people to spend on their own wishes and desires. If it works really well, then this increased spending causes more people to be hired, and more profits to be made, so that overall the economy grows.

Sometimes it has the effect of lowering government tax revenues, and can result in budget cuts for government programs, which takes government spending down (and might offset the increase in consumer spending).

Income taxes are taxes paid on regular income – like the W-2 you get each your, or self-employment income that is reported by a business owner.

Capital gains taxes are taxes paid on an asset that was held for investment and it increased in value – such as a share of stock, or a house you bought and sold later at a profit.

Budget 2010: ten ways to beat the stealth taxes

Once again, the Government is going for the jugular as it attacks your income and your wealth. But there are ways to fight back.