bush tax cut... capital gains tax?
what is the bush tax cut?
and what is capital gains tax?
social studies progect=/ please help!
please english?? im 13! i just need the definition of capital gains tax and the definition of bush tax cuts. and now i need the definition of gas tax holiday and taxing windfall prodgects. please please helpp???
- A M FrantzLv 71 decade agoFavorite Answer
Capital is an asset held for investment or personal use. Capital gains is when you sell the asset for more than you paid. (Actually, it's more than what's called the cost basis, but that's usually about the same.)
People pay capital gains mostly on stocks. They're also paid when a house is sold at a profit. There could be capital gains for selling something like a car or a TV for more than you paid, but since those usually are worth less the older they get (that's called depreciation), that rarely happens.
Capital gains are taxed in the US at a lower rate than earned income, which is the money people make doing a job. Bush cut taxes significantly on capital gains, I believe from 29% to 15%. This was one reason the Bush tax cuts primarily helped the wealthy, because while a very large number of people - pretty much anyone who buys or sells any stock - pays capital gains, the tax is paid mostly by the very wealthy, whose wealth comes mostly from stock.
The Bush tax cuts were two large bills passed in 2001 and 2003. An exact description of what they did would be very complex, in part because they didn't usually make direct changes to the tax system, but made changes that would take effect over several years, then disappear a few years later. For instance, the tax on inherited property was reduced for a few years, then eliminated, but it goes back to the old rate, if no further laws are passed, in 2011 or 2012.
Essentially, the Bush tax cuts reduced tax income significantly, eliminating the budget surplus of the Clinton years. This was made possible by a huge increase in the federal debt. In plain English what that means is that there really weren't any tax cuts at all. There was a massive transfer from current taxpayers to future taxpayers. Once you start earning money and paying taxes, you'll start paying for the Bush tax cuts, and you'll be paying for them your whole life.
Although most taxpayers had some tax reductions from the Bush cuts, about 43% of the benefits went to the top 1% of taxpayers, roughly those with an annual income of $300,000 or more.
- chatsplasLv 71 decade ago
Bush wanted to eliminate the capital gains tax, but ended up reducing it to very low tax. If you work, the sweat of your brow earns you income, earned income, which is taxed as ordinary income at a progressive tax rate depending on your total income. If you invest your money and earn interest or dividends, that is unearned income. If you sell stocks you bought and made a lot of money, you are taxed at the capital gains rate, short term or long term, depending how long you held the stock. The capital gains tax rate is as low as the ordinary tax for poverty-level wage earners. And it is NOT progressive, so if you have a lot of capital gains, your tax is at the very low rate.Source(s): tax pro