Resolved: The United States should abolish the capital gains tax.
Introduction
It seems the time has come for the Public Forum debate world to learn a little about an extremely complicated topic; U.S. tax law. Fortunately (or not, depending upon your opinion), we will focus on a fairly narrow aspect of the tax code but one which has significant impact on the lives of millions of Americans, not only wealthy ones, but millions of not so wealthy people. It is a topic which impacts virtually every home-owner, investor, or potential retiree who is depending upon certain kinds of assets, such as a 401K retirement plan or real-estate holdings. On the other hand, for those who are clever or who can afford good accountants or tax lawyers, capital gains taxes potentially spurs an incentive for some entities or individuals to find so-called tax shelters in order to avoid paying the capital gains tax.
Consider the example of a married couple who have lived in a home which was bought 30 years ago for $100,000 which in 2018 is worth $180,000. If the couple sells the house, their "gain" or profit is $80,000, and so is subject to a tax on the $80,000 gain if it is not "rolled-over" into another home purchase. Thus the expected profit on the sale is significantly reduced after the tax is paid. If they continue to hold the house, their net worth will be higher (by the $80,000 net worth of the home) but one typically does not buy groceries with net worth, one needs money and the only way to turn the gain into money is to sell the home. Okay. Admittedly, this is an overly simplified example and there are many nuances and strategies for individuals to utilize within current tax law but it is clear to see, that abolishing the tax would benefit this couple.
Of course, corporations or very wealthy individuals also hold assets which appreciate in value (the gain increases) and if these assets are sold they are subject to the same kinds capital gains tax, but if the taxes were eliminated, the profits can be extremely lucrative to the benefit of the very wealthy or large corporate entities. These entities are thus incentivized to act upon strategies which can drive up their capital gains as much as possible and turn them over (sell them) in order to gain the benefits of their investments.
Definitions
The United States
The United States is comprised of the fifty states and territories which fall under the jurisdiction of the federal government. I think it goes without saying, there is no need to define the terms. However, in this context we are not talking about the United States in the broad sense, rather we are referring specifically to the United States federal government which is the only entity capable of changing the tax law.
should
Merriam Webster defines should as a word used in auxiliary function to express obligation, propriety or expediency.
abolish
Merriam Webster defines this action as, to end the observance of (something such as a law) : to completely do away with (something).
capital gains tax
The obvious definition is taken from Investopedia.
A capital gains tax is a type of tax levied on capital gains, profits an investor realizes when he sells a capital asset for a price that is higher than the purchase price. Capital gains taxes are only triggered when an asset is realized, not while it is held by an investor. That means he can own stock shares, for example, that appreciate every year, but does not owe a capital gains tax on the shares until he sells them, no matter how long they're held.
To further refine this definition we again refer to Investopedia for the definition of a capital asset.
Capital assets are significant pieces of property such as homes, cars, investment properties, stocks, bonds, and even collectibles or art. For businesses, a capital asset is a type of asset with a useful life longer than a year, that is not intended for sale in the regular course of the business's operation. For example, if one company buys a computer to use in its office, the computer is a capital asset, but if another company buys the same computer to sell, it is considered inventory.
An asset can be virtually anything which has value but some assets, instead of increasing in value, will decline in value. For example, the family automobile is said to "depreciate" (go down in value) with every mile driven, whereas, some vehicles of rare or unique quality may appreciate in value, but these are often purchased specifically for their potential future value and held in pristine condition.
The Topic Interpretation
I am reluctant to go deeply into the varied nuances of this topic and quibble over definitions, even though it is possible this debate can easily devolve into a definitional debate over what exactly is a capital asset, subject to capital gains taxes. It would be a nightmare for a judge (okay, it would be a nightmare for me) to listen to such a debate. For this reason, I will stick to a rather broad interpretation of the topic for the purposes of my analyses. The Pro side of this resolution will supports a complete repeal or abolition of the capital gains tax. There is no particular specificity applied, so we can expand the abolition to include all manner of tax payer including individuals, corporations and everything in between. Moreover, there are no limits placed on the value of capital assets which may be liquidated without paying a tax.
As I see it, the Con side has several general positions it can assume. First, and most obvious, is to defend the status quo and claim the current tax law should be left alone. A somewhat related position could argue the capital gains tax should not be abolished, but provide that some minor repairs to the tax laws may be necessary to mitigate certain harms. For example, the position may claim it is better to reduce the capital gains tax rate rather than eliminate it altogether. Con may also make a case that the capital gains tax could be abolished for certain kinds of entities (only individuals or only certain class of companies), while avoiding a sweeping and generalized abolition.
About (Counter) Plans
One of the long-standing "rules" in Public Forum debate upheld in many regions is the general rule that a side is not allowed to offer a plan (or a counter-plan). Technically, I suppose, one cannot claim a team is offering a counter-plan unless the other team (or the resolution) proposes a plan. The NSDA High School Unified Manual, 20017-2018 states:
In Public Forum Debate, the Association defines a plan or counterplan as a formalized, comprehensive proposal for implementation. Neither the pro or con side is permitted to offer a plan or counterplan; rather, they should offer reasoning to support a position of advocacy. Debaters may offer generalized, practical solutions.
Based upon the statement "a formalized, comprehensive proposal for implementation", the major required element for a plan would be implementation details and we can surmise, these details must be spelled-out in a comprehensive fashion. Excluded from this description, I would argue, are alternatives, suggestions, or examples and indeed, I believe this has always been the case in the districts in which our team competes. My whole reason for discussing this point, is due to the fact that Con may offer such alternatives to the Pro position. For example, Con may claim, that reducing the capital gains tax for corporations could free-up billions of dollars worth of investment capital for economic expansion or infrastructure but if the Con proposes specific rates for specified classes of tax payers over some period of years, the specificity of the proposals begins to cross the line as to what constitutes a plan. Regardless, at the end of the round, it is the judge that will decide, but in my opinion one should feel free to offer alternatives or cite the examples of other nations without fear of being accused of offering a plan. I would like to clarify, that restrictions concerning (counter) plans apply in NSDA district tournaments or any tournament which operates explicitly under NSDA rules.
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