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Capital gains tax controversy flares, this time in Egypt

While U.S. lawmakers are fighting about the debt limit, talk about the way we tax capital gains -- a hot topic a few months ago when the Bush-era tax breaks (which now should be called the Obama-era tax breaks since he signed off on them last December) were about to expire -- has been pushed to the back burner.

That will change once Washington, D.C., moves on to federal budget specifics and possible long-term tax system reform.

In the meantime, we can watch another country duke it out over how to tax investment earnings.

Egypt this week proposed a new capital gains tax. Criticism was immediate and intense.

The Egyptian Stock Exchange chairman slammed the tax as a deterrent to investment, called the timing "inappropriate" and vowed to fight its approval.

"The imposition of this new tax is going to be very harmful to the Egyptian market at this time," said Abdel Salam. "It could have been applied later when the market is actually doing well, that way investors could stand to pay a little extra tax, but imposing it now is not good."

Meanwhile, Egyptian businesses are massing to fight the tax. One of that sector's arguments against a capital gains levy is that any additional taxes could lead to more tax evasion.

"It's an economic fact, when you raise taxes, there is more evasion and this brings down the revenue," said Alaa Ezz, secretary general of the Federation of Egyptian Chambers.

Does this debate sound familiar?

Yep, some tax topics play out the same worldwide.

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