The_AT0 premise_NN1 behind_PRP the_AT0 tax_NN1 increase_NN1 is_VBZ that_CJT a_AT0 preferential_AJ0 tax_NN1 rate_NN1 for_PRP long-term_AJ0 capital_NN1 gains_NN2 is_VBZ an_AT0 unjustified_AJ0 loophole_NN1 ._SENT (_PUL Gains_NN2 on_PRP assets_NN2 held_VVN for_PRP less_AV0 than_CJS a_AT0 year_NN1 are_VBB taxed_VVN at_PRP the_AT0 individual_AJ0 income_NN1 rate_NN1 ._SENT )_PUR Yet_AV0 that_CJT preferential_AJ0 rate_NN1 has_VHZ persisted_VVN for_PRP decades_NN2 ,_PUN through_PRP Democratic_AJ0 and_CJC Republican_AJ0 administrations_NN2 ._SENT The_AT0 current_AJ0 top_NN1 rate_NN1 is_VBZ 23.8_CRD %_NN0 ,_PUN which_DTQ includes_VVZ a_AT0 3.8_CRD %_NN0 ObamaCare_NP0 surcharge_NN1 ._SENT Even_AV0 in_PRP the_AT0 economically_AV0 irrational_AJ0 1970s_CRD the_AT0 top_AJ0 capital-gains_NN2 rate_NN1 never_AV0 broke_VVD 40_CRD %_NN0 ,_PUN as_CJS the_AT0 nearby_AJ0 chart_NN1 shows_VVZ ._SENT There_EX0 are_VBB good_AV0 economic_AJ0 and_CJC fairness_NN1 reasons_NN2 for_PRP the_AT0 preferential_AJ0 rate_NN1 ._SENT First_ORD ,_PUN under_PRP current_AJ0 tax_NN1 rules_NN2 ,_PUN all_DT0 gains_NN2 from_PRP investments_NN2 are_VBB fully_AV0 taxed_VVN ,_PUN but_CJC all_DT0 losses_NN2 are_VBB not_XX0 fully_AV0 deductible_AJ0 ._SENT Losses_NN2 can_VM0 offset_VVI gains_NN2 in_PRP any_DT0 given_AJ0 year_NN1 ,_PUN but_CJC losses_NN2 that_CJT exceed_VVB gains_NN2 can_VM0 only_AV0 be_VBI offset_VVN against_PRP personal_AJ0 income_NN1 up_AVP to_PRP $_NN0 3_CRD ,_PUN 000._CRD The_AT0 preferential_AJ0 rate_NN1 compensates_VVZ for_PRP this_DT0 asymmetry_NN1 ._SENT Second_ORD ,_PUN gains_NN2 in_PRP asset_NN1 values_NN2 are_VBB n't_XX0 adjusted_VVN for_PRP inflation_NN1 ,_PUN so_AV0 investors_NN2 who_PNQ hold_VVB assets_NN2 for_PRP an_AT0 extended_AJ0 period_NN1 pay_NN1 taxes_NN2 on_PRP increases_NN2 that_CJT are_VBB partly_AV0 illusory_AJ0 ._SENT Other_AJ0 parts_NN2 of_PRF the_AT0 tax_NN1 code_NN1 ,_PUN including_PRP the_AT0 income-tax_AJ0 brackets_NN2 ,_PUN are_VBB indexed_VVN for_PRP inflation_NN1 ,_PUN but_CJC not_XX0 capital_NN1 gains_NN2 that_CJT arguably_AV0 need_VVB it_PNP the_AT0 most_DT0 since_CJS assets_NN2 are_VBB often_AV0 held_VVN for_PRP decades_NN2 ._SENT Third_ORD ,_PUN a_AT0 capital-gains_NP0 tax_NN1 is_VBZ a_AT0 second_ORD tax_NN1 on_PRP corporate_AJ0 income_NN1 ._SENT A_AT0 neutral_AJ0 revenue_NN1 code_NN1 would_VM0 tax_VVI all_DT0 income_NN1 only_AV0 once_AV0 ._SENT But_CJC the_AT0 U.S._NP0 also_AV0 taxes_VVZ business_NN1 profits_NN2 when_CJS they_PNP are_VBB earned_VVN ,_PUN and_CJC President_NP0 Biden_NP0 wants_VVZ to_TO0 raise_VVI that_CJT tax_NN1 rate_NN1 by_PRP a_AT0 third_ORD (_PUL to_PRP 28_CRD %_NN0 from_PRP 21_CRD %_NN0 )_PUR ._SENT When_CJS a_AT0 business_NN1 distributes_VVZ after-tax_AJ0 income_NN1 in_PRP dividends_NN2 ,_PUN or_CJC an_AT0 investor_NN1 sells_VVZ the_AT0 shares_NN2 that_CJT have_VHB risen_VVN in_PRP value_NN1 due_AJ0 to_PRP higher_AJC earnings_NN2 ,_PUN the_AT0 income_NN1 is_VBZ taxed_VVN a_AT0 second_ORD time_NN1 ._SENT No_ITJ less_AV0 a_AT0 progressive_AJ0 than_CJS Democratic_AJ0 Rep._NN1 Jerry_NP0 Nadler_NP0 recently_AV0 deplored_VVD the_AT0 unfairness_NN1 of_PRF "_PUQ double_AJ0 taxation_NN1 "_PUQ regarding_VVG and_CJC state_NN1 and_CJC local_AJ0 tax_NN1 deduction_NN1 ,_PUN though_CJS he_PNP probably_AV0 had_VHD no_AT0 idea_NN1 he_PNP was_VBD stating_VVG a_AT0 principle_NN1 that_CJT really_AV0 applies_VVZ to_PRP corporate_AJ0 income_NN1 and_CJC capital_NN1 gains_NN2 ._SENT The_AT0 most_AV0 important_AJ0 reason_NN1 to_PRP tax_NN1 capital_NN1 investment_NN1 at_PRP low_AJ0 rates_NN2 is_VBZ to_TO0 encourage_VVI saving_NN1 and_CJC investment_NN1 ._SENT Consumption_NN1 —_PUN buying_VVG a_AT0 car_NN1 or_CJC yacht_NN1 —_PUN faces_VVZ a_AT0 sales_NN0 tax_NN1 but_CJC not_XX0 a_AT0 federal_AJ0 tax_NN1 ._SENT But_CJC if_CJS someone_PNI saves_VVZ income_NN1 and_CJC invests_VVZ in_PRP the_AT0 family_NN1 business_NN1 or_CJC in_PRP stock_NN1 ,_PUN he_PNP is_VBZ smacked_VVN with_PRP another_DT0 round_NN1 of_PRF tax_NN1 ._SENT Tax_VVB something_PNI more_AV0 and_CJC you_PNP get_VVB less_DT0 of_PRF it_PNP ._SENT Tax_NN1 capital_NN1 income_NN1 more_AV0 ,_PUN and_CJC you_PNP get_VVB less_DT0 investment_NN1 ,_PUN which_DTQ means_VVZ less_DT0 investment_NN1 to_TO0 improve_VVI worker_NN1 productivity_NN1 and_CJC thus_AV0 smaller_AJC income_NN1 gains_NN2 over_PRP time_NN1 ._SENT 
