A new tax on capital gains is on the cards, with a new article claiming it could lead to millionaires and billionaires losing billions of dollars in taxes.
The headline on the Financial Times article, published on Friday, says the move will help “wealthy investors” to “avoid paying taxes” by “avoiding the burden of capital gains taxes”.
The article was authored by Nick Dearden, a professor of finance at the University of Melbourne and the former chief economist of the International Monetary Fund.
It says:The US has a tax on income from capital gains of about 9 per cent, which is higher than Australia’s.
Under the proposed tax, millionaires and the wealthy who make more than $US150,000 a year would have to pay $10,000 to $13,500 a year in capital gains tax.
However, the article says that the rate for wealthy investors who make less than $200,000 annually could drop from 18.5 per cent to 12.5, or even zero.
The article says it’s possible to avoid paying capital gains in many cases because investors can “reduce their tax liability by selling their shares”.
It says “many wealthy Americans have taken advantage of tax loopholes to reduce their capital gains to an absolute minimum, and the result has been to reduce the value of their investments in a number of sectors”.
“This is a significant revenue gain for the Treasury and, therefore, is a good thing for the economy and for the taxpayer.”
“The Taxation Office is currently considering how best to administer the new tax to reduce any tax implications for wealthy people, who, in turn, will be able to pay capital gains at a lower rate,” the article said.
“In this context, the Treasury would like to thank all those individuals who have contributed to reducing the capital gains rate for them to continue to enjoy a fair rate of tax.”
Read more on this story from News24.
Originally published as Tax-free capital gains ‘could cost’ millionaires millions