Floyd Norris’ column in Friday’s issue of The New York Times, entitled“Unearned, and Taxed Unequally”, covers a lot of interesting topics … and leaves out one glaring detail.
The interesting stuff is about forms of investment income, past tax policies, problems with having different items taxed at different rates, and so on. There is even some discussion of double taxation.
The glaring omission is that the entire piece discusses income various investment sources, and whether it should be taxed … and misses that all investments, by definition, were taxed before they were invested.
Initially, all saving must come out of income. But that income was taxed (at least if it was earned within the last century or so). So, the saving was taxed. Then it was invested. If it earns income, there is an ethical issue about whether taxing it a second time should even be on the table. Norris ignores this point.