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I posted a question about that on the law stack exchange and learned that the $3000 figure became so in 1978.

Originally, my question was two parts: (1) When was the $3000 limit first imposed, and (2) the rationale behind why it hasn't been increased in so long a period of time. There was some thinking that the second part of my query was better suited here.

So, bearing in mind that in any given tax year, the IRS allows capital losses to offset capital gains dollar for dollar, with any excess loss deductible from taxable income up to $3000. This apparently has been the case for over forty years with no increase in the allowable deduction since 1978.

Have any political attempts been made to increase the $3000 amount to a more equitable figure? If so, can someone provide some information as to the attempts made and reasons for the failures? Or, has no political party seen fit to try and raise this figure in over forty years?

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  • Questions about motivations (e.g. why do people do things) are off-topic for Politics.se. Perhaps you could tighten the focus of this question, such as editing out references to your Law.se question and focusing on possible past attempts to raise the limit and the reactions those attempts garnered?
    – Thegs
    Dec 30, 2020 at 20:34
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    Is there a reason for the use if the word 'equitable' in the last paragraph? It is not very equitable to use taxes paid by low earners to subside loss making investments by those with the finances to make them.
    – Jontia
    Dec 30, 2020 at 23:16
  • Quick response on the “equitable” comment mentioned previously). When you risk and gain, you pay notable taxes. When you risk and lose, you a limited to $3000 in losses you can deduct. That is hardly equitable. No one subsidizes the losses, that is wholly (I believe) after tax money at risk. It seems very unfair for the Government to take from you profit, but then limit you reducing what you pay when you lose.
    – Bob
    Jul 30, 2022 at 21:03
  • Capital gains on the US receive favorable tax treatment, at lower rates than standard income. Furthermore, it would be a simple matter to realize a capital loss and then reinvest in a similarly performing security as a means of creating a paper loss to avoid paying taxes. Most Americans see neither capital gains nor losses as taxable events since they are either not engaged in securities trading at all or their only investment is in retirement accounts where capital gains do not apply.
    – Don Hosek
    Jul 30, 2022 at 21:46

1 Answer 1

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Have any political attempts been made to increase the $3000 amount to a more equitable figure?

Yes. However, this answer is necessarily incomplete for several reasons, including the age of the source, the difficulty of searching congress.gov for specific bills that address the issue, and finding specific explanations for the failure to pass the legislation.

Is It Time to Increase the Capital Loss Limitation?, March 26, 2009.

Proposals

Part of the tax plan Senator McCain promoted while campaigning in 2008 was to temporarily increase the capital loss limitation from $3,000 to $15,000 (“McCain Unveils New Economic Proposals,” The New York Times, October 2008). This isn’t the first time such a proposal has been suggested. In 2002, the House Ways & Means Committee even voted to increase the limitation (H.R. 1619). Following is a sampling of recent proposals.

The most recent attempts to increase the capital loss limit appear to be:

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  • Is there information in that databases why these attempts failed (not votes on them or other info)? Jul 31, 2022 at 12:12
  • @Trilarion - Is there information in that databases why these attempts failed []? No, there rarely is. Most bills simply die in committee. Though H.R. 1619 was reported and placed on the House calendar, it was never brought to the floor. The bill was sponsored by Lofgren (D-CA) but was considered a "Republican bill" (H.Rept. 107-734, Dissenting Views). If passed, it may not have been considered in the Democratic controlled Senate, there being only 2½ months remaining in the session.
    – Rick Smith
    Jul 31, 2022 at 20:49
  • Thanks for the info. So these attempts were somehow regarded as lower priority and were simply not getting sufficient attention from fellow representatives. Aug 1, 2022 at 6:59
  • @Trilarion - I can not be certain of all time frames, but the attempts to increase the capital loss deduction appear to occur after market declines when losses are more common. Were the attempt to increase the capital loss deduction a priority, indexing the capital loss deduction to inflation (without the immediate boost to $10K), might be less objectionable and could have been done recently when the Republicans had control. Lately, the push has been to index purchase cost to inflation to lessen the amount of tax on capital gains.
    – Rick Smith
    Aug 1, 2022 at 13:55

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