If I sell a stock for $50, I am obliged obliged to keep track of the date I originally purchased it and the amount you originally paid for it, so that I can determine both the cost basis and the holding period. I am obliged to calculate the difference between my purchase price and sale price, and then pay either 15% of the difference (assuming it was a gain and not a loss) if I've held it for more than a year, or 28% (actually 22% for my income bracket) of the difference if I've held it for less than a year.
I don't get why I have been paying taxes for 30 years on the same income that a collectable's trader hasn't been.
People
understand and
expect to pay cap gains on stocks, and stock trades are
large transactions that have material effects on people's net worth. No one is selling a few hundred dollars of stock in a year. They're either active traders who are making a significant chunk of their income by trading, or they're regular people with retirement accounts; in both cases, the treatment of capital gains is essentially baked in to the existing processes. Traders keep track of cost basis and retention period because they know that's part of the trading; people with retirement accounts don't really worry about it because their finance company deals with it for them. In both cases there are omnipresent electronic systems to keep track of the required information automatically.
But effectively
no one is expecting to pay capital gains taxes on small sales of physical assets, even though technically it's always been required on such sales, and even though nearly everyone
makes such sales.
The small number of people who, like stock traders, have been making a living by buying and selling knick-knacks have already been covered by the earlier, higher reporting requirements. The new requirements will hit
everyone with a tax which they previously didn't even know existed. The issue isn't the tax, it's the
compliance burden. We're now forcing everyone to understand how to handle capital gains (including tracking original purchase price and date of purchase) for items that are essentially of no material consequence, and effectively
no one is prepared to do so.
This is bad policy. Laws and regulations should have thresholds, and those thresholds should reflect both the materiality of the matter at hand (i.e. $10,000 matters but $10 is immaterial) and the normal expectations and habits of normal people who are neither sophisticated nor highly informed on the regulations in question. In short, we shouldn't be requiring people to account on their tax returns for payment flows as low as $600/year because a) that's too small to matter and b) almost nobody is expecting it and c) almost nobody knows how to handle it and d) almost nobody should
need to know how to handle it. It's a nuisance, and the government should not be imposing nuisances on the public at large.
