ABSTRACT
A capital gain may be taken as 'that form of gain that arises to the owner when some of his property appreciates in value'. One of the unresolved tax controversies is whether capital gains constitute income, or at any rate should be treated as income for tax purposes. The usual distinction in capital gains taxation between short-term and long-term is also a source of inequity. Short-term gains are normally taxed progressively as income; long-term gains at a much lower rate; but the demarcation line is arbitrary and creates hard cases which fall just the wrong side of the line. The first general capital gains tax in the United Kingdom dates from 1962. The strongest argument for a capital gains tax is equity; without it taxable capacity goes untaxed; income tax can be avoided by the conversion of income to capital gains. Yet the tax has many unsatisfactory features.
