Craig Moffett Still Busily Predicting Doom For Verizon → This is why ST capital gains taxes need to go WAY up

Short term capital gains taxes need to be so high that investors can't go in and demand the decimation of a company like a bunch of piraña for short term profits.

Short term capital gains taxes should be 80%+ and long term should be more than just 1 year. Perhaps have a mid term rate with long term being at least 5 years.

All investors should have a vested interest in long term economic viability and success of the company they are investing in.

Wasn't this a lot less of an issue when companies only had to report earnings annually?

Short term investors have always been at odds with common sense.

You're theory is great except there would be nobody around to buy your shares when it comes time to sell.

Take a moment and think about what you wrote.

Says who?

Take a moment and think about what you wrote.

Unfortunately that tax rate would totally distort investment strategies and lead to people investing in financial instruments that are still tax advantaged. Like municipal bonds; treasuries; convertibles; commodities; real estate; etc. And it would drive down the ROI of stock investments. End result is that investment dollars available for capital projects will actually go down and not up like you want.

It isn't a help when those sub 12mo investors are the ones acting to kill capital projects.

There will always be a substantial number of mid-term investors willing to wait more than 12 months for a pay day in the meantime it puts everyone on the same team.

I don't understand this reasoning. Attempting to force someone to invest their personally earned resources for an extended time frame is akin to you working really hard at your day job without the ability to cash your paycheck for the next 20 years. Taxing the hell of out capital gains stymies investment and doesn't serve anyone, to include the US Treasury or the companies that you hope to prop up.

No it isn't. First no one is forcing anyone to do anything. They can take their profits, they just pay a higher tax rate. Short and long term gains are already taxed at different rates, I simply propose the difference be higher.

Investment through trades does NOTHING for the company. None of that money goes to the company, it simply goes to the previous stock owner.

Ongoing capital expenditures by the company are funded by REVENUES which are put in jeopardy by these shortsighted investors who don't want the company to spend anything now to show higher profit now, higher dividends now so they can dump their stock now. They don't care if the company is around next year. They don't care if next year VZ loses 5 million subs to competitors. They will make every effort to stop capital investment even if it means the company goes under or is otherwise seriously damaged. And who does that serve?

People want to tie CEO pay to longer term company success but people don't consider the damage done by shortsighted investors. Everyone else has a vested interest in long term company success.

Unfortunately the officers of these companies have the same fiduciary duty to short term investors who care nothing about company viability 18 months out as they do the long term investors. And they have to serve the vultures before the employees, customers, officers, suppliers, localities and everyone else who benefits from and supports the existence of that company.

Everyone should be on the same team and under the current system, everyone is with the exception of the stock flippers.

And it isn't me propping up the company...it is the company being free to keep itself propped up without a bunch of vultures beating them down.

And you proposed extending the time line for qualified long term capital gains beyond a year, which does affect investment decisions.I mostly agree. I didn't state that individual trades did anything for the company. However, stock price does matter for a company when it come to equity offerings and shopping around for financing.And I'd suggest that those ignorant investors who don't understand increased revenue at the expense of growth deserve to lose their money in the short term. I honestly do not believe a majority of companies bend to the whims of these investors.As well they should. Each share in a class of shares is equivalent. If I own a piece of paper representing a portion of a company, I should be treated no different than someone else who owns a similar piece of paper, regardless of how long we've each owned the paper.That's not really true.This is where you lose me. How are investors with different time horizons on different teams?

Simply put, short term investors have no stake in long term viability, by their very definition.

You think stuffing in your mattress is a better investment ?(not recommended with a waterbed)

IF the only reason people invest is for the SHORT term, we'd better better off without their small (and getting smaller) money.
what the markets need is LONG term investment and matching (consist ant over time/predictable) tax law.
It will take some time to slowly and PREDICTABLY increase the incentive to INVEST and wait patiently

Ok. And I continue to believe that corporations don't bend to short term investors' desires, which makes them irrelevant as far as corporate health is concerned.

You don't think it was investor pressure that had AT&T going fiber to the node instead of the curb? I do.

No, I think it was sound fiscal responsibility, mixed with a little misguided enthusiasm for VDSL's capacity and that AT&T believed it had a little more breathing room with its cable competitors than it actually has.

Besides, if any investor pressure occurred, it would've been from the guys that actually matter, such as the pension funds and other institutional money managers, not the short term investors that you're primarily concerned with.

Please do not suggest confiscatory tax rates for anything even though you have a point about current short term capital gain tax rates causing too much emphasis on short term profits. A reasonable compromise might be taxing capital gains at the same rates as regular income with no reduced capital gains rate until an investment has been held for at least three years.

That is another thing...capital gains rate should not be lower than other earned income. There is no justification for someone trading paper to be taxed at a lower rate than a Dr or ditch digger.

So you're really saying the maximum Federal tax on the increased value of an investment whether it's a corporate stock that's been held for just one year or a home or small business that's been held for twenty should go up from the scheduled increase to 20% on Jan. 1st to 39.6%. For those who live in states with income taxes it would be even more.

No, I'm saying the MINIMUM tax paid on those should be the income tax rate, unless held short term (flipped) in which case the tax rate should be much higher. But yeah, if a guy is in the 39% bracket and makes income that year from an investment he liquidates, he should pay income tax on the profit.

'Regular folks' can't hold on to an uncashed paycheck for 12.1 months and pay only 15 or 20% instead of 28 so why should a guy trading paper get to?

You do realize I've been agreeing with you on that point. Our main difference is that I see an advantage in encouraging permanent job creation through the tax code in the form of lower taxes on capital gains that are truly long term while you don't. While I think very few paper traders will wait three years I can't disprove your opinion that they might wait five. If we go beyond five or ten years I also think it is wrong for government to collect tax revenues on what is often purely inflation when it is the government's job to control inflation.

What some called inflated value over time others call appreciation. Regular wages get socked by inflation too, but you don't seen them getting a special inflation based tax break. They get socked every year no matter what. They only difference is a regular wage earner take out their appreciation every year while the asset sitter hoards it. So someone who makes 150k every year get socked every year. Why should someone who hordes 1500000 and takes it after ten years pay a smaller percentage. He had the choice to liquidate at any time. Same goes for savings rates...getting a few points on a passbook account, surely less than inflation but the poor sap still has to pay full income tax rates on the earned interest. He loses money to inflation and is still taxed on it at his full bracket rate. So why should the asset holder be any different?

There should be no tax breaks for paper swapping while those who actually perform labor for their income are put over a barrel. Income is income and shorter the term the more regressive the tax should be.