Capital Gains Tax.

I would like to see the Capital Gains Tax, as applied to stocks and bonds, modified a bit. Specifically, I would like to address investment profits derived from securities subject to regulation/control by the SEC.

If you invest in a stock/bond/security and later sell it for a profit you pay a tax on the difference between your purchase price and your selling price – your Capital Gain. In and of itself, that’s fine. But, if you are selling one stock in order to buy or invest in another stock, you pay the Capital Gain tax on your profit and only have the remainder to invest in the new stock. You haven’t taken the profits and used them in the non-security world and you have less to invest in a new security. I would like to remove the Capital Gains Tax on security sales where the proceeds are directly applied to the purchase of another security. You are only taxed on the proceeds you take out of the security marketplace.

I think this would encourage, indeed stimulate, investment in new potential industries and encourage people to move their investments around. I find it sometimes isn’t worth contemplating moving investment money around when you know you will be paying a 15% – 20% – 30% tax on the proceeds. So it sits, slowly not growing. I may take other money and invest it in the new industry I think will be growing but the older money stays where it is, stuck until it is needed. The newer industry doesn’t get the boost it might with more capital investment and then good things don’t happen.