Taxing Capital Gains

[deacphan]

They tried that already. It was called the USSR. I visited there in 1989. It sucked.

russians can fuck up everything. if we put american work ethic and ingenuity in to it i'm sure we could excel. unless you doubt america....

 

[deacphan]

Sure I understand the tax incentives. Should they be greater than the tax incentives to work?

how many americans are taxed at a higher effective rate than 15% or whatever?

 

[deacphan]

which would collect more tax revenue and be better for the american economy: mortgage interest rate deduction repealed or capital gains taxes increased? it's a lot easier for low income Americans to invest in their future in markets than real estate.

 

[deacphan]

granted we'd need to educate people on that, and considering we can barely get people to read or learn math teaching them about compound interest is rocket science.

 

[SkyDivingDeacon]

I don't really buy the double taxation argument with capital gains. Maybe somewhat in a C corp setting (C corp has paid tax on income that is presumably driving your share price higher), but overall, I think it is a pretty weak argument. The gain really never has been taxed.

I don't know that I think capital gains should be treated the same as ordinary income, but I do think there should be less of a rate difference for high income taxpayers. Overall though (and it seems like you and a lot of folks on this thread seem to agree) I think the cap gains rate is the least of our problems with the tax code (along with it, the carried interest exception, which is a small, but infuriating thing to me). Lowering the corporate rate would be a good place to start, but I really think the whole corporate system could use an overhaul. Making subchapter K less complicated would really help my sanity too, but even with its complexity, partnership taxation generally seems to work OK.

Eh, maybe the gain hasn't been taxed twice but to be in a position to pay capital gains, you've already been taxed at every conceivable rate before making an investment with the potential to create a gain. So sure, the gain hasn't been taxed, but the act of investing surely has. And as a result, if the overall investment works out in your favor and provides any kind of return, that return is taxed. And the driveway that you drive down on your property that you pay property taxes on, in your car that you paid sales tax on, using the gas that you also paid sales tax on, to get your investment statement showing those realized gains...was all 'paid' for with after-tax dollars. Oh, and you owe tax on your car too. This after you paid your toll road fees going to and from work, where oh yeah, you were taxed there too.

Fucking hell man. I hate taxes.

 

[SkyDivingDeacon]

I don't really buy the double taxation argument with capital gains. Maybe somewhat in a C corp setting (C corp has paid tax on income that is presumably driving your share price higher), but overall, I think it is a pretty weak argument. The gain really never has been taxed.

I don't know that I think capital gains should be treated the same as ordinary income, but I do think there should be less of a rate difference for high income taxpayers. Overall though (and it seems like you and a lot of folks on this thread seem to agree) I think the cap gains rate is the least of our problems with the tax code (along with it, the carried interest exception, which is a small, but infuriating thing to me). Lowering the corporate rate would be a good place to start, but I really think the whole corporate system could use an overhaul. Making subchapter K less complicated would really help my sanity too, but even with its complexity, partnership taxation generally seems to work OK.

And I agree completely with the second part of your post. Well said. Just had to whine and complain a little in my last response...

 

[deacphan]

well you could always leave society.

 

[SkyDivingDeacon]

granted we'd need to educate people on that, and considering we can barely get people to read or learn math teaching them about compound interest is rocket science.

Yup, those taxes really are being put to good use...

ETA: If you're in a county where you have to pay taxes (car tax for example) take a peak as to where that money is sent. In Wake county, something like 85% is sent to schools. So yeah, that tax money is doing one of two things:

1) Getting lost moving from the county to the school.
2) Being used to hire really dumb teachers to teach their kids how to unlearn reading and shit.

I have no idea what you've posted thus far, but this idea that taxes are used for the betterment of society is utter nonsense. It's either wasted, or used on something that generates very little economic benefit.

 

[deacphan]

it's hard with all the road upkeep for your car and weapons systems.

 

[deacphan]

oh also the war on drugs.

 

[deacphan]

Yup, those taxes really are being put to good use...

ETA: If you're in a county where you have to pay taxes (car tax for example) take a peak as to where that money is sent. In Wake county, something like 85% is sent to schools. So yeah, that tax money is doing one of two things:

1) Getting lost moving from the county to the school.
2) Being used to hire really dumb teachers to teach their kids how to unlearn reading and shit.

I have no idea what you've posted thus far, but this idea that taxes are used for the betterment of society is utter nonsense. It's either wasted, or used on something that generates very little economic benefit.

while i appreciate your negrep about "adding nothing to the topic" i have actually posted on the subject of capital gains taxes, unlike you who just wants to cry about taxes. make more money, leave, or provide a better solution. you drive on the roads, bitch about being "protected" (i'm sure), etc. quit bitching, and pull up those damn bootstraps.

 

[PhDeac]

Yup, those taxes really are being put to good use...

ETA: If you're in a county where you have to pay taxes (car tax for example) take a peak as to where that money is sent. In Wake county, something like 85% is sent to schools. So yeah, that tax money is doing one of two things:

1) Getting lost moving from the county to the school.
2) Being used to hire really dumb teachers to teach their kids how to unlearn reading and shit.

I have no idea what you've posted thus far, but this idea that taxes are used for the betterment of society is utter nonsense. It's either wasted, or used on something that generates very little economic benefit.

Like education? C'mon man.

Elect better people to use your taxes. Paying your dues to be a damn American isn't the problem.

 

[jhmd2000]

Sure I understand the tax incentives. Should they be greater than the tax incentives to work?

If you want to build an ownership economy, the incentives should be geared toward owning. Capitalism is not a curse word.

I wonder how much better our country would be if we taught actual life skills in high school. If we replaced British literature with a personal finance and investing class (taught by someone with credibility and experience), I wonder how much better people's 20's and early 30's would be. Pushing credit cards and student loans on unsuspecting, trusting young people isn't something our culture should be proud of, particularly when they graduate without any job or life skills. Of course, we've decided that these unskilled, inexperienced, highly leveraged unemployed generation still living at home are now the backbone of the funding of our health care system. Our country is going to run into who-owns-who problem with the young people it's been beating up on for the last 30 years.

 

[PhDeac]

So there should be incentives for being at the top if the mountain but not to climb it.

 

[ONW]

If you want to build an ownership economy, the incentives should be geared toward owning. Capitalism is not a curse word.

I wonder how much better our country would be if we taught actual life skills in high school. If we replaced British literature with a personal finance and investing class (taught by someone with credibility and experience), I wonder how much better people's 20's and early 30's would be. Pushing credit cards and student loans on unsuspecting, trusting young people isn't something our culture should be proud of, particularly when they graduate without any job or life skills. Of course, we've decided that these unskilled, inexperienced, highly leveraged unemployed generation still living at home are now the backbone of the funding of our health care system. Our country is going to run into who-owns-who problem with the young people it's been beating up on for the last 30 years.

I agree with the bolded part jhmd, which makes me nervous.

 

[PhDeac]

You agree with it because it's a good point.

 

[jhmd2000]

So there should be incentives for being at the top if the mountain but not to climb it.

No, not that at all. The incentives should show people the way to the top of the mountain. You can buy stock in your cable company for less than the price you can buy cable. You can buy Verizon stock for less than the price that you buy wireless internet service on your phone. eta: If nobody teaches which one to buy, you buy the shiny object. We can do better.

In my estimation, the biggest obstacle to advancement is our actual incentives are pushing people in the wrong direction. The more helpless you render yourself, the more "benefits" you get (and most importantly, it's never your fault you're not advancing, other people aren't paying their fair share and therefore your "benefits" [sic] are in jeopardy). That's a funny looking "benefit", since they are all dead-end roads. We're not teaching our kids the right lessons.

eta: If you started with a class of high school freshman and give them 1/4 of the day "humanities", 1/4 of the day STEM, 1/4 electives and 1/4 of the day life skills/foreign language, the great majority of the class would benefit from the latter 3/4's. History, English, econ and civics are important but they are not more important than teaching somebody to eat healthy, exercise and learn life skills they'll actually use (including foreign language). You could offer CPAs, attorneys, financial institutions a tax credit to staff and instruct beginner's personal finance and investing classes at public schools in a way that would be a far better value to the students than paying someone to teach a high school journalism class. Far more of our students are going to grow up to become owners of a checking account than they are to edit newspapers.

 

[PhDeac]

But someone who makes their money buying Verizon stock should be taxed lower than someone who installs Verizon fiber optics.

 

[jhmd2000]

But someone who makes their money buying Verizon stock should be taxed lower than someone who installs Verizon fiber optics.

The person who installs Verizon fiber optics should buy Verizon stock with his disposable income. If he follows that incentive over the course of his career (and diversifies those investments over time), he will make a lot more money owning Verizon than working for Verizon.

The person who installs Verizon fiber optics and (truly) doesn't have any disposable income to buy Verizon stock probably doesn't pay any income tax at all, and would be a fool to want to trade effective tax rates with anyone.

 

[2&2 Slider To Leyritz]

But someone who makes their money buying Verizon stock should be taxed lower than someone who installs Verizon fiber optics.

As was noted earlier, in all likelihood they are not. The 20% LTCG rate is a fixed federal rate as to that asset. The guy installing the fiber optics may start out at a 20% federal rate on paper, but he isn't paying a 20% rate after his deductions.