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Originally Posted by Reiwa [You must be logged in to view images. Log in or Register.]

The Good Ol’ Days: When Tax Rates Were 90 Percent

The article presents a one-sided view without addressing potential counterarguments from those who support high marginal tax rates. Including these counterarguments and then refuting them would make the piece more balanced and persuasive.

Change tax deductions on passive investments losses on real estate then [You must be logged in to view images. Log in or Register.].

But what was probably the biggest lost deduction for wealthy individuals was the elimination of deductions on passive investment losses on real estate. Before 1986, wealthy individuals would often buy real estate with no hopes at all of it cash flowing. That wasn’t the point. The point was that real estate is depreciated every year in the eyes of the IRS. Even though in the long run, properties usually go up in value, the IRS assumes that every twenty-seven-and-a-half years a property’s value will depreciate to zero.

This “loss” can be written off. So, for example, say a man earning $100,000 a year buys a property worth $275,000. He rents out the property and breaks even on it. The tax code allows that person to write off $10,000 as a loss which he can count against his income for that year. So now he only has to pay taxes on $90,000. If he owned ten such properties, his income would be zero, at least according to the IRS.

That deduction is now gone for everyone but “active” real estate investors, or those who invest in real estate as a career.