Debate: Should Capital Gains Be Subject to Social Security Taxes?

This is just one more ploy by the Democrats to try to unfairly tax people to fund a socialist agenda — and it’ll never pass in our current political environment.

Bloink: Taxpayers with the highest income levels are those who are also able to reap the most sizeable capital gains. Similarly, they’re the taxpayers who also have the opportunity to take actions and use tax loopholes that allow them to minimize their ordinary income — because they aren’t as reliant on that income to cover basic living expenses.

In the end, these taxpayers often pay less than their fair share. For that reason, it makes perfect sense that those capital gains should also be subject to Social Security taxes.

Byrnes: The Social Security tax isn’t a general revenue tax. This tax is directly tied to a taxpayer’s eventual receipts from the system and is based on earnings during working years. It makes no sense to require higher income taxpayers to pay more without a correspondingly higher benefit.

Bloink: This proposal is a fair middle ground that avoids eliminating the preferential capital gains rate entirely. Some proposals have discussed taxing capital gains at ordinary income tax rates for the wealthiest taxpayers.

This would imply adding the payroll tax rate to the existing lower long-term capital gains rates, which for many, could result in a rate that does not reach the highest income tax rate given wealthy taxpayers’ ability to manipulate their taxable income base through the use of capital gains.

Byrnes: Social Security taxes are handled separately from other types of taxes, including the capital gains taxes. We have a tax structure that taxes different types of income differently for a reason.

We want to encourage taxpayers to maintain their long-term investments to provide stability to help our businesses and economy grow. Raising those taxes by imposing Social Security taxes on them would reduce the benefit given to long-term investments and, in the end, cause more harm than good.

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