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In: Accounting

Do you think the reduced capital gains and dividends rate is fair? Write a two-page research...

Do you think the reduced capital gains and dividends rate is fair? Write a two-page research article on the topic. Be sure to include a reference page.

Solutions

Expert Solution

No reduction of capital gains is unfair.

The major sources of income for capital gains is by inflation and as well as retained earnings.

For example Mr.D had purchased property in 1996 at 5000rs where the market value at the time of sale in 2016 is 28000rs.

In this case the difference amount is 23000rs is not fair.

But as per act the difference amount is treated as income and is taxable on that amount.

It is an inflated amount but not income.

The second one is retained earnings.

The retained earnings if we reinvest it will be taxed at double time which is unfair.

In this double taxation will arise.

Soo the capital gains tax is unfair.

But some of the authors also said tha reduced capital gains and dividends is fair.

The reason behind this is American Govt leaders recognized that this is the root for their success.

This country became rich through hardwork of many business owners and businesses with the help of the people who provided capital for undertakings. Hence to be in competition

those who bear risk, they must be awarded by lower tax on capital gains and dividends.

ekkarill92 answered 2 years ago
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