Harry Sanabria

[Harry Sanabria @hpiddys]

@linzcom Correct take: the CGT changes raise taxes by more than was (publicly) modeled in many scenarios under reasonable assumptions. What’s more, the changes unintentionally incentivize ETFs over individual stock picks, as only the former flattens underlying stocks to net real return.

[Harry Sanabria @hpiddys]

@linzcom You could pay in excess of 100% tax on real net gains using the old CGT regime. Invest $100 for a year with 3% CPI, sell for $103.50 the 30% tax bracket and you have $1.75 taxable. Thats $0.53 tax on $0.50 of real gain.

The CGT changes are bad but this is an incorrect take.

[Harry Sanabria @hpiddys]

@RR7890634213911 @talkingcockatoo @cjoye Right, the new CGT treats ETFs favorably because they flatten net real gains.

But the example’s implication, stated more precisely, is “the new CGT can tax you more than your real gains where the old CGT could not” which isn’t true. Both regimes can tax you more than real gains.

[Harry Sanabria @hpiddys]

@alexdavid1988 @taipan168 The article is wrong: it says _average_ real return of $1250 across 4 stocks, so total real return of $5000, taxed at $1800 (I guess they’re rounding?), but then they compare that to the average not the total.

[Harry Sanabria @hpiddys]

@just_brash CGT is on sale: money and risk flows from one investor to another. Investors _will_ make their bag, the alternative method being dividends, which flows money from operations (worker pay) to investors. This flow of money is worse for everyone, so why incentivize with high CGT?

[Harry Sanabria @hpiddys]

@Wonderwailer @TaxPawspective @DirtMccGirt While morally salient, your comparison is economically irrelevant. The real question is why should productive investment (shares, not crypto lol) be taxed, and therefore incentivized, the same or worse as unproductive real estate investment?

[Harry Sanabria @hpiddys]

@Keg767 It’s better to spread risk among equity investors instead of the taxpayer.

Taxes should favor risky productive assets (equities) over unproductive (real estate) or risk-free (interest-bearing) assets. The problem isn’t raising taxes; it’s doing so disproportionately on equities.

[Harry Sanabria @hpiddys]

@Keg767 Everyone’s focused on whether they like (or are like) the person in the example.

What matters is the economic outcome. Incentivize fixed interest assets and that’s where the money will go, concentrating risk on the bank/govt that now takes on risk, or raises tax, to pay interest