Time to tax capital gains as ordinary inc [W167]

[Gipper]

Higher risk does come with higher reward. When you invest into passive investments, the only thing you are risking is your excess wealth, and you expect or at least hope to gain more wealth from those passive investments, while doing absolutely no personally work or effort to obtain that new wealth.

Which is really one of the biggest irritations of the tax break on capital gains, it's only allowable on PASSIVE investments. If you actively manage and work in your own business, you don't get that tax break.

Anyhow, the price of investments already have the risk factored in. Thats why investments in the stock market typically result in a higher ROI than in safer investments, like Treasuries.

You also have to remember that certain money market instruments are tax-free on top of that. Municipal bonds, for example. There are plenty of factors that help offset risk. The key is to find a combination that works for you, which is why portfolio management is as lucrative as it is.

The Kind of Knottingham wasn't a libertarian either. He was also thief.

 

[TurtleDude]

The top 1% of income earners have it pretty good. Sure, they've worked hard and earned it, but then, so do the bottom 99%. They're just more likely to rely on earned income instead of capital gains.

So, why not tax capital gains at the same rate as ordinary income?

It seems to me that is an idea whose time has come.

In case you were wondering, it looks like the current "recovery" has treated the top earners pretty well:

envy is what motivates most of this nonsense.

why should some pay a higher rate than others especially when those who already pay the most actual taxes pay higher rates. It should be the other way around, the more you pay in actual dollars, the less your rates.

your rant seems to be that its wrong for successful people to continue to be successful even though they are paying far more than their fair share. if you want income all taxed the same, the same rate should apply to everyone

 

[TurtleDude]

I'd rather it just stay as it is. Higher risk should come with higher reward.

I highly disagree with the OP's position. For some reason, he thinks that something deserves to be taken just because they own it.

Robin Hood wasn't a libertarian. He was a common thief.

Robin hood actually stole from the government and returned the wealth to those who had been taxed too much

 

[Gipper]

Robin hood actually stole from the government and returned the wealth to those who had been taxed too much

He was still a common thief, regardless of justification. To draw similarities between the 1% and the Sheriff, the 1% would have needed to gain their wealth through oppression of the common man.

However, since I'm not a socialist, I won't say that. "I don't have it and they do" isn't enough reason for me to steal.

 

[TurtleDude]

He was still a common thief, regardless of justification. To draw similarities between the 1% and the Sheriff, the 1% would have needed to gain their wealth through oppression of the common man.

However, since I'm not a socialist, I won't say that. "I don't have it and they do" isn't enough reason for me to steal.

I have seen lots of these threads and they have two things in common

1) people trying to pretend higher taxes on OTHER people is for the common good

2) when in reality it usually comes from someone who hasn't the drive or resources to be investing and is mad that others are.

the fact is is if someone wants to treat all income as equal (ignoring the fact that dividend income is taxed TWICE) then by all means lets treat it as equal rather than making those who already pay more than they use higher rates than those who are getting subsidized citizenship benefits paid for by others

 

[SBu]

Yes, I see an alternate possibility. There was a time when we had no capital gains taxes. We then established capital gains taxes. By your theory, every rich person would have pulled their money out of the US and invested it elsewhere. But that didn't happen.

My assumption would be that if we taxed all income at the same rate, we could lower the tax rate, or have much larger standard deductions. This would stimulate the economy because it would increase demand. Companies would make more money, and thus the stock market would become even more valuable, regardless of the tax rate.

I didn't see any suggestion of this in the OP. People have a lot more viable alternatives now to invest in. The focus should be more on wealth creation among the 99% instead of taking from the 1%. In reality, the people that are invested in the stock market are a lot more than the top 1%. You would be hurting a lot more people than you would be helping.

 

[Gipper]

I have seen lots of these threads and they have two things in common

1) people trying to pretend higher taxes on OTHER people is for the common good

2) when in reality it usually comes from someone who hasn't the drive or resources to be investing and is mad that others are.

the fact is is if someone wants to treat all income as equal (ignoring the fact that dividend income is taxed TWICE) then by all means lets treat it as equal rather than making those who already pay more than they use higher rates than those who are getting subsidized citizenship benefits paid for by others

I don't blame them per se, as that standpoint is often taken by people with little to no economic knowledge. It's just a standpoint based on greed and envy.

You could argue "common good" in it, but when you have to do evil things for it, it offsets all potential. It's like saying that we could curb overpopulation with genocide.

 

[Fisher]

Above a cap, investment income should absolutely be taxed as income.

It is taxed as income unless you are in the lowest brackets. Regardless, this is a horrible idea that will lock up wealth in dynastic trusts. The far better route would be to require businesses to convert to cash accounting method for income tax purposes.

 

[Tigger]

The top 1% of income earners have it pretty good. Sure, they've worked hard and earned it, but then, so do the bottom 99%. They're just more likely to rely on earned income instead of capital gains.

So, why not tax capital gains at the same rate as ordinary income?

It seems to me that is an idea whose time has come.

Great idea if you want to see people Stop investing, selling property, etc....

The Government is only allowed one shot to prosecute a suspect, why should they be allowed to get multiple shots to tax the return on monies which have already been taxed?

 

[TurtleDude]

Great idea if you want to see people Stop investing, selling property, etc....

The Government is only allowed one shot to prosecute a suspect, why should they be allowed to get multiple shots to tax the return on monies which have already been taxed?

the parasite advocates will claim that the government taxing dividend income twice is permissible since it is at two different levels-corporate and individual which is intellectually dishonest because the dividends are owned by the shareholders and the government takes two cuts at the wealth so owned

 

[Threegoofs]

The top 1% of income earners have it pretty good. Sure, they've worked hard and earned it, but then, so do the bottom 99%. They're just more likely to rely on earned income instead of capital gains.

So, why not tax capital gains at the same rate as ordinary income?

It seems to me that is an idea whose time has come.

In case you were wondering, it looks like the current "recovery" has treated the top earners pretty well:

Working under the assumption that we need to have even more progressive taxation on the wealthy, the question really is- does a more progressive tax on income hurt the economy more than a higher cap gains rate?

I'm not sure of the answer. But it's pretty clear to me that the cutting of the cap gain rate in the late 90s sure didn't seem to goose the economy much, so a gradual return to those rates is entirely reasonable.

And before I hear the screaming from the anti tax crowd, I will tell you that I would be directly affected adversely by either tax.

 

[Helix]

Why shouldn't we tax all investment income at the same rate as income from work?

For that matter, I really don't understand why we tax income from work at all. Any time you tax something, don't you end up with less of it? Do we really want people to become less personally productive?

i think taxing it as income above a certain cap is a fair compromise.

as for income tax, i have no problem with it other than that i would raise the brackets back to 1990s levels. trickle down doesn't work in the current dynamic, and it's time to move away from that theory.

 

[Dittohead not!]

envy is what motivates most of this nonsense.

why should some pay a higher rate than others

That is exactly my point.

If taxes on capital gains is unfair, then taxes on earned income are even less fair.

 

[Tigger]

the parasite advocates will claim that the government taxing dividend income twice is permissible since it is at two different levels-corporate and individual which is intellectually dishonest because the dividends are owned by the shareholders and the government takes two cuts at the wealth so owned

That's not even what I'm talking about.... My paycheck gets taxed. Once I have that money, and level of Government which has had their "bite at that apple" should not be allowed to tax whatever I use that money for. ONE bite only.

 

[TurtleDude]

That's not even what I'm talking about.... My paycheck gets taxed. Once I have that money, and level of Government which has had their "bite at that apple" should not be allowed to tax whatever I use that money for. ONE bite only.

well the feds tax your income, in some states the state taxes your income and then the state taxes sales as does the feds on some items (guns ammo)

I don't believe in income tax at all btw

 

[Dittohead not!]

Working under the assumption that we need to have even more progressive taxation on the wealthy, the question really is- does a more progressive tax on income hurt the economy more than a higher cap gains rate?

I'm not sure of the answer. But it's pretty clear to me that the cutting of the cap gain rate in the late 90s sure didn't seem to goose the economy much, so a gradual return to those rates is entirely reasonable.

And before I hear the screaming from the anti tax crowd, I will tell you that I would be directly affected adversely by either tax.

Yes, and so would I. Why do I pay one rate for income from one source, and another for income from another source? Income is income. Tax it all at the same rate. If the wealthy are paying too much, then make the tax schedule less "progressive".

 

[MaggieD]

The top 1% of income earners have it pretty good. Sure, they've worked hard and earned it, but then, so do the bottom 99%. They're just more likely to rely on earned income instead of capital gains.

So, why not tax capital gains at the same rate as ordinary income?

It seems to me that is an idea whose time has come.

In case you were wondering, it looks like the current "recovery" has treated the top earners pretty well:

Why tax capital gains at all? That certainly wasn't always the case. I think taxing capital gains only began in the 1950's. Let's go back to the good old days.

 

[Tigger]

well the feds tax your income, in some states the state taxes your income and then the state taxes sales as does the feds on some items (guns ammo)

I don't believe in income tax at all btw

I'd rather have an income tax than the sales tax. That's irrelevant though. Each level - Fed, State, Local should only get one bite are your income. If the Fed/State want income tax, fine. Then no State sales tax, gas tax, or any other non-usage-based tax. The local government can find one tax they prefer as well. If it's an excise tax, fine but that's the only shot they get at your money.

 

[Threegoofs]

Yes, and so would I. Why do I pay one rate for income from one source, and another for income from another source? Income is income. Tax it all at the same rate. If the wealthy are paying too much, then make the tax schedule less "progressive".

True. But you want to encourage investment (cap gains) over income, so tipping the scales to incentivize more investment makes sense. But it's clear 15% is unnecessarily low.

Remember- these types of things can be fluid- people can structure compensation to be taken in either cap gains or ordinary income.

 

[MaggieD]

I'd rather have an income tax than the sales tax. That's irrelevant though. Each level - Fed, State, Local should only get one bite are your income. If the Fed/State want income tax, fine. Then no State sales tax, gas tax, or any other non-usage-based tax. The local government can find one tax they prefer as well. If it's an excise tax, fine but that's the only shot they get at your money.

That little corner of your world I'd like to live in.

 

[Tigger]

That little corner of your world I'd like to live in.

It just boggles my mind that people don't realize how many different bites the government takes at the apple of our income. Dozens of small bites that add up very quickly.

 

[Gipper]

i think taxing it as income above a certain cap is a fair compromise.

as for income tax, i have no problem with it other than that i would raise the brackets back to 1990s levels. trickle down doesn't work in the current dynamic, and it's time to move away from that theory.

The only reason it "worked in the 90s" is because it rode a bubble. You try to do the same thing today and not only would you not see an increase in revenue, but probably drive us back into recession.

 

[imagep]

I didn't see any suggestion of this in the OP. People have a lot more viable alternatives now to invest in. The focus should be more on wealth creation among the 99% instead of taking from the 1%. In reality, the people that are invested in the stock market are a lot more than the top 1%. You would be hurting a lot more people than you would be helping.

If our tax burden is shifted from those with the lowest propensity to spend the marginal dollar of income to those with the highest propensity, then demand would increase, businesses would expand to meet demand, more jobs would be created, more wealth would be created, and business profits would increase. As an added bonus there would be a lower need for welfare, unemployment benefits and guberment freebees.

 

[imagep]

I don't blame them per se, as that standpoint is often taken by people with little to no economic knowledge. It's just a standpoint based on greed and envy.

You could argue "common good" in it, but when you have to do evil things for it, it offsets all potential. It's like saying that we could curb overpopulation with genocide.

My position is that shifting the tax burden to those who are most able to afford it will improve the economy for everyone, including the rich, offsetting the net cost of their higher tax burden.

Look at it like this, if I force you to give me $100, and the end result is that I give you back $110, are you any worse off because I made you give me $100? It's all about having a system that keeps money rapidly circulating so that it optimizes the creation of new goods and services (wealth).

 

[specklebang]

This happens to be one of my "topics".

I'm about as far from the 1% as it's possible to get without getting food stamps. I'll take a SWAG that this year I'll maybe make $58K including $25K worth of SS.

But I'm long retired. I haven't put in an "honest days work" since maybe 1998 or so. My income peaked around 1991-1995 and then declined and declined and declined after that.

However, during my 1% years, I didn't have so much as a farthing worth of capital gains. I had a business, that business made money which flowed to my one man S Corp and then became ordinary income. Why? Because I wasn't an investor, I was a business. I hired people and effectively resold their labor at a profit.

In the meantime, people who did nada and hired nobody but "invested" in obscure financial instruments, paid tax at about 1/3 of what I paid. I never bitched about it and I'm still not bitching exactly but since the topic is this, and I showed up today, I might as well tell you how not sorry I feel for these poor multi-millionaires and their precious capital gains rate.

In retrospect, it should have been the other way around. I had an American business with American employees and my product was 100% American. Why couldn't they just let me pay 15% and the guys who make money off Chinese labor pay the full rate? If that depresses the price of stocks, well, I guess that those stocks didn't mean much, did they? Not only do we give these non-contributing millionaires a better rate than a businessman, we even QE them, printing billions to inflate stock prices.

As for payroll FIT, talk about a total kick in the dick for these poor bastards who have to get up at 5 AM to get ready to spend the next 8 hours slogging away at their labor. Why can't they pay 15% instead of giving all the breaks to those who contribute the least? People whose investments are used to buy American businesses, strip them down and outsource the jobs.

Unfortunately, our 15 percenters are the most influential of us. Even King Obama bows before them and with a straight face says "my economic recovery has gotten 4% to you peasants and 96% to your Overlords.

And puhleeez don't suggest 110% taxes. That's just manipulative use of exaggeration. But I'll be impressed if someone can rebut my opinion© with a rational explanation.

Also, don't confuse this with Corporate taxes. There should be NO Corporate taxes on American businesses who use 90% domestic labor. THESE are the job creators, not the Hedge Fund billionaires.