Capitol Gains Tax
One of the silver bullets being considered for a tax deal is the Capitol Gains Tax, which is taxing the increase in value of things like stocks, real estate, other assets that appreciate in value as time goes by. Yes, there are stock increases that happen that outstrip inflation, IPOs come to mind. And like most of the other tax credits that have put the state budget in a hole, the intial Capitol Gains Tax exemption was passed by the Democrats back in 2004.
On the face of it one would think that it hits only the rich but the middle class pay most of the Capitol Gains Tax in general but the wealthy do benefit more from this particlur tax exemption with around 18,000 Oklahomans using the tax avoidance deduction compared to the hundreds of thousands that use Earned Income Credit. In looking at it it can be difficult to determine which side to be on. One one hand the upper income citizens are evading the taxes. On the other hand it is really a tax on inflation, the lose of value of the U.S. dollar due to the feds printing more money and creating digital cash, driving down the value of the dollar and increasing the dollar value of the assets. Government creates the inflation and also profits from the increased taxes on the assets through the Capitol Gains Tax.
However, most people in the upper income class know full well how to legally evade these taxes. They go for tax exempt bond or use depreciation to shield the value of the asset as long as they can and switch out properties with careful timing.
In the end Sooner Tea Party will not support increasing the Capitol Gains Tax or decreasing existing exemptions for the simple fact that it gives the state more money and prevents the state from cutting back the size and scope of government. As gubernatorial candidate Gary Richardson says, we have a spending problem, not a tax problem.
