THE CAPITAL GAINS GAME
The capital gains tax structure rewards long-term investment: If you sell assets you’ve owned for a year or less, the capital gains are taxed at your regular marginal tax rate. Of course, the average family can’t afford to have money tied up in investments when they need it for practical applications like food, clothing, and transportation. An investor like Warren Buffett has the means to hold onto stocks for years or even decades as they go up in value. He can also defer paying taxes on that increase in his net worth until he actually sells the stock.
