"IRS: Heads I Win, Tails You Lose" by Richard W. Rahn (Cato Institute: Commentary)

"IRS: Heads I Win, Tails You Lose" by Richard W. Rahn (Cato Institute: Commentary): "Capital gains come from sales of stocks and bonds, businesses, real estate, art objects and anything else of value. The IRS capital-gains tax scam consists of two parts. First, it does not just tax real gains, but also imaginary gains resulting solely from government-caused inflation. The second part of the scam involves severely restricting the deductibility of net losses.

Most investors in the stock market or in real estate suffered major losses during the past year and are hurting. Taxpayers are allowed to deduct their losses from their gains but are restricted in deducting their net losses against ordinary income to just $3,000 per year. Yet the government taxes people on 100 percent of their gains."

"Finally, the apologists claim the tax is paid only by the rich, which is another whopper. Anyone with a farm, small business or corporate stock - which includes most Americans - almost always pays capital gains taxes at some point. A person who has spent 30 years building a small business and sells it for $300,000 in order to retire is considered "rich" that year by the political left and the IRS."

"the only way the IRS can get tax revenue from commodity trades over the long run is by taxing the inflation component and limiting loss deductions - which are both fundamentally dishonest and unjust ways to tax. In addition, the tax on commodity trading is extremely costly to administer and prevents taxpayers from protecting themselves against the government-induced inflation."

"As Bernard Madoff found out, it is a crime to tell people they have imaginary income, yet the folks at the IRS tell millions of taxpayers each year that they also have imaginary income - and worse yet, force them to pay tax on this nonexistent income. Why is Madoff in jail but the folks at the IRS and Congress who devised a similar scam still running free?"