How about a progressive Capital Gains Tax?

[Brendan Burgess]

Most of us agree with that Income Taxes should be progressive - the more you earn, the more tax you pay.

Why do we have different regime for CGT?

I propose a progressive Capital Gains Tax with lifetime thresholds as with CAT
For example:

First €10,000 of Capital Gains: Exempt
Next €90,000 of Capital Gains: CGT at 20%
Balance over €100,000: CGT at 40%

 

[Clonback]

I agree CGT should be progressive but with a higher exemption.We must remember when Charlie McGreevy cut the rate from 40% to 20% the total take virtually doubled.

 

[Horatio]

Most of us agree with that Income Taxes should be progressive - the more you earn, the more tax you pay.

Why do we have different regime for CGT?

I propose a progressive Capital Gains Tax with lifetime thresholds as with CAT
For example:

First €10,000 of Capital Gains: Exempt
Next €90,000 of Capital Gains: CGT at 20%
Balance over €100,000: CGT at 40%

I could buy into that.
Simplify.

 

[Zenith63]

I agree CGT should be progressive but with a higher exemption.We must remember when Charlie McGreevy cut the rate from 40% to 20% the total take virtually doubled.

There’s some interesting discussion on this topic and other CGT rate effects in the latest ‘Tax Strategy Group Capital & Savings Taxes- 21/13’ report. In summary though, it is not clear that reductions in the CGT rate cause anything more than a temporary bump in tax revenues. I think a UK report concluded something similar a couple of years ago.

Personally I’d be in favour of just rolling CGT into the income tax regime and increasing the entry points for the various bands to compensate, such that it is tax revenue neutral - basically a tax cut for virtually all earned income workers. I say this an an entrepreneur who is fortunate enough to benefit greatly from the lower CGT rate. It’s how it is done in Norway, Denmark, Luxembourg, Italy and is what the UK report referred to earlier recommends. Fair, simple and less tax for average earners to lay - what’s not to like?

 

[Brendan Burgess]

it is not clear that reductions in the CGT rate cause anything more than a temporary bump in tax revenues.

Zenith that is a great reference - thanks. I had always suspected that.

 

[Brendan Burgess]

Personally I’d be in favour of just rolling CGT into the income tax regime

I have suggested a variation of that in this post:

Should investment income and capital gains be taxed at the same rate?

I am drafting my submission to the Commission on Tax and Social Welfare and I want to tease out this issue. I don't know why investment income is taxed at different rates to capital gains.

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