Certainty Allows Planning

Certainty Allows Planning

The Certainty Allows Planning Another reason the current capital gains tax is good is because it permits planning. If you know that the taxable consequence of selling a capital asset is going to be the same now as it will be in the future, you are more able to achieve intelligent tax planning. Most capital assets have a built-in variable: the resale market. Real estate values have cycles just like any other investment. Anyone who has held real estate for more than ten years can tell you the market has highs and lows.

The last thing an investment needs to compound its uncertainty and risk is a variable tax environment. In one worst-case scenario, politicians could eliminate the capital gains tax to get votes, but the next administration would decide that same increase in wealth should be taxed at the (higher) ordinary income tax rates.

The last thing we need is politicians messing around with tax rates that are already the lowest they have been in a half century. Stability and certainty in an investment or business environment encourage additional investment by allowing intelligent growth planning.