Greatest Tax Injustice

Short term capital gains being taxed as ordinary income, but deductions on short term capital losses can be claimed for mere $3000 or less.

We are led to believe that the best way to invest our money is in stock markets. With yield on our savings, in the banks being less than 0.45%, we have no choice but to turn to stock markets to park our money.

Unfortunately, lots of things don’t make sense in the markets.  It is not necessary that a stock will go up over a 10 year period, even if the business entity’s revenues and profits go up year after year.  We tend to invest when the market is going up and sell, when the market is going down, caving under pressure, fear of loosing even more money.

If we have short term capital gains of $20,000 two consecutive years, and have a capital losses of $40,000 next year, our portfolio, seem to break even.  In reality, uncle Sam made money on us for two years, but when we had loss, we are asked to claim it over a 13 year period. Even worse, if we lost $10,000 two years in a row and made $10,000 in third year, we still have to pay taxes for $7000.

I am sick of hearing people asking to charge a trading tax or increase capital gains tax on speculators. Especially when system is rigged such that uncle Sam gains money on profits but feels no pain on the losses.

The day, short term capital losses can be claimed dollar to dollar against ordinary income, anybody has right to talk about increasing taxes on capital gains or charging a trading tax.