You’ll need to come up with a way of redistributing wealth without impacting price signals. Peoples net pay rate is a price signal. I’m not aware of any method of taxation that doesn’t affect price signals.
> I’m not aware of any method of taxation that doesn’t affect price signals.
Well, you could distort price signals less by:
(1) Not selectively favoring capital income in taxation via a reduced rate for long-term gains, and
(2) Not selectively disfavoring labor income (beyond #1) in taxation via payroll taxes.
This would also, on a revenue-neutral basis, effect an upward shift of tax burden (downward shift in after-tax income) compared to the status quo, given where labor and capital income dominate.
> I'd be in favor of this change iff capital losses could offset capital gains infinitely forward and backward in time with no limits.
I'm not negotiating with you, I’m describing how to undo a deliberate price distortion advantaging a particular class in status quo tax policy.
That said, while I wouldn't do exactly what you want, I’d do something similar and from the perspective of basically every taxpayer with capital losses (and many without) better:
(1) allow recognizing income for tax purposes is advance of realizing it, without limit, inflation indexing advance-recognized income when it is then used to offset against realized income.
(2) allow capital losses to offset income recognized in the current year (this is effectively the same as an infinite forward offset against income, not restricted to capital income, and protected against erosion by inflation.)
(3) allow deferring tax recognition of any or all realized income exceeding 110% of the minimum realized over the past 3 years (excluding 10/9 of any deferred amount; that is, with maximum deferral amount, the baseline would not change), provided that no amount may be deferred without first using all available advance-recognized income.
(4) Allow further deferring up to 90% of any remaining previously-deferred income after recognizing all current realized income not
eligible for deferral under #3.
(5) At death, final year taxes would allow notionally “deferring” any taxes deferrable under the normal rules one final time, which deferred amount would then be taxed at the average (not marginal) rate of the final tax year before the “deferral”.
(6) At death, any unused advance-recognized income after applying to the final tax year would be retroactively applied to past tax years starting with the most recent (but “deadjusted" for inflation back to the tax year it is applied to.)
(Tangentially to the central issue here, I’d also eliminate separate estate and gift taxes, but keep the per-recipient per-year exemptions from the former for tax free transfers of either kind, and then tax any non-exempt transfers as normal income to the recipient.)
Pigovian taxes are an example where altering price signals is a feature, not a bug: simultaneously disincentivize negative externalities, and act as wealth redistribution with dividends/UBI.
If you ask for reform, you will wait forever. Reform is possible when there is a credible threat of a much greater shake up.
Reform are concession that demonstrate what more is possible in a given moment. Without further progress it will be withdrawn after the threat dissipates.
