Capital gains taxation

I tend to agree with Dr. Burman's testimony.  For those interested in the current discussions regarding cap gains rates here is a link to an article that sets out some of the schools of thought.  For any who do not want to read a long article about tax law I have copied Dr. Burman's testimony here...because I like it.  His take on earned (as opposed to realized) capital gains as taxable income has a solid accounting foundation.  Most, if not all, higher wealth individuals include the increase in the value of their liquid assets in income for their personal finacial statements.  At the same time doing away with corporate income taxes, and allocating the income to the owners for income tax purposes, makes a lot of sense and would finally do away with the "double taxation" argument that is older than I am.  The last sentence below re: 1031 exchanges...well...never mind.

"Leonard Burman of Syracuse University testified that capital gains ought to be treated much like ordinary income. “How should capital gains be taxed?” he said in his prepared testimony. “Under an income tax, the answer is that capital gains should be taxed in full as they are earned, not when realized. Capital gains are income, not really different in substance from interest, rents, and royalties: other kinds of capital income that are taxed as ordinary income. Under the pure comprehensive income tax, corporate income would be allocated to shareholders and taxed as ordinary income, in the same way that S-corporations and partnerships are taxed.
"Obviously we don't tax capital gains or corporations that way," Burman added. "Capital gains are taxed only when realized, and gains on assets held for at least a year are generally taxed at a lower rate than other income. Capital gains on assets held until death or donated to charity, however, are never subject to income tax. And corporations are subject to a separate tax that is not integrated with the individual income tax. The consequence is that some corporate income may be subject to two layers of tax: the corporate income tax plus the individual income tax on capital gains and dividends.” Burman recommended that Congress should look into the legislation on 1031 exchanges to stop them from being misused."

http://www.accountingtoday.com/news/congress-considers-changing-tax-treatment-capital-gains-64040-1.html