I think any investment, other than profit from the sale of a person's primary residence as that is generally Plowed right back into a new mortgage, should be taxed as ordinary income. If I have $10m in the bank and make $400k per year in interest income there is no reason it should be taxed any different than the person who makes $400k in earned income.
The majority of his taxes would be probably be in long term capital gains. Then his 10% hing to the church would be a tax deduction as well, lowering his effective rate. If we did what liberals wanted, and tax it at a higher rate, there would be less venture capitalists seeding businesses for creating jobs.
Did Obama he 10% to reverend Wright's church?
OK, I was mistaken. I ran the rates by his released tax returns. The lowest rate was 19.x%. From a gross income, it would be less, but probably no less that about 17%.
May as well get you "see I told you so's" in now.
But to have 10M of savings to invest that means he actually made 20M and already gave the government half. Why take half again on the investment of his savings?
You dramatically remove the incentive to invest.
That's what liberals fail to understand.
They tax productivity, and think it's the way to go.
Sure, in the beginning. Just like the business owner was already taxed on the money he put into starting a business. But over time, most of the money these traders are investing is money they made BY investing. So that was never taxed at the ordinary rate.
He must have had a really ty accountant.
I could live with the holding time to qualify for capital gains treatment to be extended...say to 18 months.
That solves your day trader problem.
maybe, but top earners living in an income tax state like New York are paying 50%+ on ordinary income.
Half? In what universe? Are you suggesting someone with 10m will not invest if he has to pay 39.5% as opposed to 15%. Please point me to the relevant studies. They don't exist.
That is exactly what I am suggesting.
He will not risk his money and invest it in the United States if the government takes half the profits and none of the losses.
Most people don't get wealthy by being stupid.
Last edited by CosmicCowboy; 08-18-2012 at 04:14 PM.
Maybe the ordinary rate is too high.
Well I don't want it to sound like it's the day traders I'm most concerned about. I'm more concerned about the guy that sells $5 million in company stocks. I still don't see any good argument for not collecting the same from him that you would from a guy who makes $5 million selling cars (hypothetically). I don't really feel like the time the stock is owned is relevant. It's still new income once it's sold.
If a guy gets stock options and sells the stock when it is exercised it is taxed as ordinary income.
I say tax the out of day traders. I only respect the long term stock holder. Part of the corporate America problem is the short term outlook for stock expectations. Share holders pressure the companies to look short term instead of long term for viability.
What about something like this:
70% for day trading, except things like options exercised.
50% for holdings less than 1 month.
35% for holdings less than 1 quarter.
25% for holdings less than 6 months.
20% for holdings less than 1 years.
15% for holding more than 1 year.
Oh, but the time IS relevant. the whole point of a lower capital gains rate is to encourage long term investment, which them fosters jobs and a better economy for all. The fact that some are gaming the system doesn't automatically make the whole system bad.
I shouldn't have said company stock... Say I have Apple stock that I've held for 20 years. If I decide to sell it tomorrow, I'm not sure why I shouldn't have to pay ordinary income tax percentages on that.
I mean sure it sucks, but no more than the same percentage being pulled out of my bi-weekly paycheck.
There is a difference.
When you tax capital gains from stocks, it is double taxation. The stock investor already paid taxes, as a part owner, through the corporate taxes of the company.
I would be OK with that if you removed corporate taxation. productivity taxes only harm our nation. If we moved the bulk of the tax rate from the productivity, to the consumption (stock sales) then we would have a more viable economy.
Why? Because the dollar you invested in 1992 is worth $1.65 in todays dollars. It's a phantom profit. The government already got their tax through inflation.
It sounds perfectly fair to me. The reason we allow a primary homestead exemption is not because it's "not fair" - but because we want to encourage residential mobility.
We could have an entire thread on this, but allow me to ask: what societal interest is being fulfilled by treating investment earnings in a tax preferred manner compared to funds earned at a job?
Are we trying to instill upon our society that your goal should be to not work and live off of investment income instead?
If your goal is to encourage direct investment that creates jobs, the tax code should be tilted to put direct investment at an advantage to investing in the secondary market. Again, remind me, what purpose are we serving by giving tax advantages to secondary market gains?
Taxation, at it's most philosophical level, exists to accomplish one of two things:
1) Fund the operations of the taxing body
2) Incentivize/disincentivize certain behavior
You can't make an argument for (1) in this case, not even from the perspective of the Laffer Curve, because Direct Investment creates jobs - not secondary investment.
So that leaves us with (2). What interest to we have in rewarding passive financial gain over other forms of income?
How did the government "get" it?
I know that if I am contemplating making an investment where I have a 50/50 chance of making/losing money, and I know if I lose money it's tough , but if I make money the government takes half of the profits I am seriously gonna consider going Charlie Sheen and investing my money in hookers and blow.
This is a really good point you make - but one that I think works against you.
Lower capital gains taxes incentivizes greater risk-taking. Is that what we are trying to accomplish?
I realize I am oversimplifying and you will probably slaughter me on it but dollar inflation IMHO is principally caused by the government perpetually spending more money than it takes in in revenue and printing dollars (again oversimplifying) to make up the difference, thus diluting the value of the existing dollars.
There are currently 3 users browsing this thread. (0 members and 3 guests)
Posting Permissions
Reply With Quote