Taxes, are we ready for these new ones?

[swansont]

Correct Moontanman. It's as if they think property taxes are permanent structures that when eliminated, all the benefits they provided go away. Weird.

 

Benefits do go away when you eliminate taxes. I was in Oregon when they did this with measure 5 that rolled back property taxes. And then in the next budget cycle, people were astounded that fire and police services were cut back. The state became responsible for the school funding, and that got cut back as a result; money was diverted from the university system to the local K-12 schools as well, meaning the entire educational system took a hit.

 

Money in = money out. What's weird about that?

—

 

Almost all money is taxed more than once. I pay income tax and then, on that income, pay sales tax when I spend it. The already-taxed money I spend ends up as income for someone else, which is taxed. The money I get has already been taxed, by definition, because I am employed by the government. So how is the argument about being taxed more than once not specious?

[ParanoiA]

Benefits do go away when you eliminate taxes. I was in Oregon when they did this with measure 5 that rolled back property taxes. And then in the next budget cycle, people were astounded that fire and police services were cut back. The state became responsible for the school funding, and that got cut back as a result; money was diverted from the university system to the local K-12 schools as well, meaning the entire educational system took a hit.

 

Money in = money out. What's weird about that?

—

 

Almost all money is taxed more than once. I pay income tax and then, on that income, pay sales tax when I spend it. The already-taxed money I spend ends up as income for someone else, which is taxed. The money I get has already been taxed, by definition, because I am employed by the government. So how is the argument about being taxed more than once not specious?

 

It's weird because they apparently didn't account for the loss of revenue. Yes, I find that stunningly stupid. You remove property taxes and then increase somewhere else. It's the removal of the direct link to property that I advocate, not eliminating the funding and then wondering where all the services went.

 

Seriously, property taxes remain the chief revenue source for local governments but account for but a fraction of what we pay in the various directions we are taxed by all government. There is really no argument against this, it is happening right now. We know we can impliment a different tax method because we already have services with other governments that don't use the property tax method, and have never used the property tax method.

 

It's an ugly tax because you can lose hundreds of thousands of dollars for a tiny one thousand dollar tax bill. No other tax we have directly applies leverage to the most valuable asset a family could possess. And *that's* why they like it - it works. And so does holding a gun to someone's head, that works pretty good too. Not exactly ethical though.

 

 

And the reason that is specious is because the comparison implied with his capital gains income is with wage income. But wage income came from someone else and provided no capital for anyone else, only labor. Whereas his capital gains income came from money previously earned from wages, and then not spent on toys and gadgets but rather used to provide capital for someone else.

 

The implied alternative this backlash seems to purport is that it would have been better if he didn't invest that income at all and instead just sat on his money. He would have no capital gains for anyone to be offended about and people with ideas would still be looking for someone with money to invest in them, no jobs created, no growth.

 

I think that's ridiculous to be so full of resentment for someone else that it leads you to reason against the good of society.

[swansont]

It's weird because they apparently didn't account for the loss of revenue. Yes, I find that stunningly stupid. You remove property taxes and then increase somewhere else. It's the removal of the direct link to property that I advocate, not eliminating the funding and then wondering where all the services went.

…

I think that's ridiculous to be so full of resentment for someone else that it leads you to reason against the good of society.

So you acknowledge that you need to increase taxes to make up for a shortfall (in this case property taxes, but we have a shortfall on the federal level). But when such an increase is proposed — an increase in income taxes — you ascribe it resentment and other emotions. With no actual evidence. Your position only seems to allow cutting taxes.

 

And the reason that is specious is because the comparison implied with his capital gains income is with wage income. But wage income came from someone else and provided no capital for anyone else, only labor. Whereas his capital gains income came from money previously earned from wages, and then not spent on toys and gadgets but rather used to provide capital for someone else.

 

The implied alternative this backlash seems to purport is that it would have been better if he didn't invest that income at all and instead just sat on his money. He would have no capital gains for anyone to be offended about and people with ideas would still be looking for someone with money to invest in them, no jobs created, no growth.

 

I think that's ridiculous to be so full of resentment for someone else that it leads you to reason against the good of society.

 

Most stock investments, providing capital gains, are not providing capital for someone else. Most trades are on the secondary market, and the improvement in the value of the investment is based on the performance of the company, which is based on the labor provided by the employees.

 

How is restoring some taxes to a previous level against the good of society? What good for society was provided by that cut? Job growth under that system has been anemic, wage expansion has been poor to nonexistent, and we are deeper in debt because of it. That's good? Or resentful?

[iNow]

Here's the rub...when you fail to pay the IRS, even tens of thousands of dollars, they raid your checking accounts, garnish wages and intercept tax refunds - your property isn't at risk for quite some time, years and years, if ever at all. However, when you fail to pay your property taxes, like your house, your property is the *first* point of leverage. They don't bother with checking accounts, garnishing wages and intercepting refunds - they go straight for the throat and take the property.

 

I had a friend personally go through this two months ago. I agree, he's brought this on himself and hasn't paid for 3 years, but this house was bought and paid for years ago. They threatened to sell the house at auction for one year's worth, an overdue 600 dollars, complete with a due date to be out of the house if it wasn't paid by the deadline.

 

We helped him get it paid and I launched a new crusade. His father spent 20 years buying that house, just so Tulsa County can sell it to get 600 bucks. This is too costly. Taxes must be paid, but taking people's homes? He would have been homeless, iNow. He and his mother. How is this a good government? How is this good for society? It is good for us to gain two homeless people and 600 bucks in revenue?

 

We don't put people to death for failing to use a turn signal. I don't think we should take people's homes for failing to pay their government school bill.

It's an ugly tax because you can lose hundreds of thousands of dollars for a tiny one thousand dollar tax bill.

 

I agree with you that there is opportunity here to alter the way penalties are imposed upon noncompliance, but the above is hardly an argument against the property tax itself. It's an argument against the penalties imposed for noncompliance.

[ParanoiA]

So you acknowledge that you need to increase taxes to make up for a shortfall (in this case property taxes, but we have a shortfall on the federal level). But when such an increase is proposed an increase in income taxes you ascribe it resentment and other emotions. With no actual evidence. Your position only seems to allow cutting taxes.

 

My previous post on the matter counters everything you just wrote. Here try reading it again.

 

Yes, we can simply tax them differently for the same things. The multiple directions of taxation we experience right now are evidence of its efficacy. Any state or local government can just as easily impliment a consumption sales tax or increase the one they have to pay for schools, police, fire - if that's how they fund them. And then it's more equitable to the citizens since it eliminates the geographic link - rich neighborhood schools for the wealthy kids and poor run down schools for the poor kids. I think I've had quite enough of class division begetting yet more class division, by government schools.

 

Then, the those local governments are set up for voucher based schooling where the money follows the child, not the institution. This allows parents maximum flexibility (oxymoron really considering mandated schooling) and control over the kind of educational environment they want their children in. Schools will have to compete for business instead of taking their classrooms for granted. The people can demand the level of education they want in a market like this far better and more efficiently than joining PTA and fielding a bureaucracy of union and government bullshit. See how long it takes to change your neighborhood school into the one you want for your child and compare that to how long it takes to shop for one.

 

You can disagree, but you can't change my words to make believe I said only eliminate taxes and never increase. I specifically called for an increase and even outright implementation of a new tax.

 

I distinguish local governments from state and federal because most of their work is right there servicing the pragmatics of the people, the infrastructure. Building roads, police, fire and all that - truly government services that I fully support. Unlike the political games at the state and federal level where the need for their services are more debatable due to differing political philosophies. Other than entrenched crony capitalism and their methods of taxation, I don't have a lot of criticism of local governments. They can be wasteful, but I suspect more honest work from them.

 

How is restoring some taxes to a previous level against the good of society? What good for society was provided by that cut? Job growth under that system has been anemic, wage expansion has been poor to nonexistent, and we are deeper in debt because of it. That's good? Or resentful?

 

I'm trying to figure out where this question came from and how it relates to what I wrote. I said that to complain about Romney's capital gains is to imply that it would have been better if he didn't invest that money at all, and received no capital gains for anyone to complain about. That's the resentment I'm talking about...how is it good for society for him not to invest? How do we benefit *more* from him sitting on his money?

 

The resentment and complaints suggest to me that people are more concerned with what someone in particular is gaining rather than the system as a whole. It's as if they'd complain about his capital gains even if he was writing checks directly to the American people. They are not focused on the system, just one node that offends them. It's class resentment, not reason.

 

I agree with you that there is opportunity here to alter the way penalties are imposed upon noncompliance, but the above is hardly an argument against the property tax itself. It's an argument against the penalties imposed for noncompliance.

 

Agreed, except that I also support eliminating multi-point tax events so I prefer both changes. We get taxed from too many directions and this makes a "black cloud" out of our tax system. If we the people in this republic cannot easily review and realize the tax code then we can't be the check against an out of control tax code can we?

 

It is the disadvantage of the republic that we require "keep it simple stupid" since we are a mass of people governing ourselves, but that's our charge. They can have complex tax codes in governments that are not by the people since their people don't serve as a check on their governments.

 

Also, I would think you'd be attracted to eliminating the disparity in school funding created by linking funding with real estate values. By removing the property tax link, each school could receive equitable funding since they aren't tied to a rich or poor neighborhood.

 

And for us free market people, it preps the ground for voucher based school funding.

Edited August 9, 2012 by ParanoiA

[swansont]

My previous post on the matter counters everything you just wrote. Here try reading it again.

 

 

 

You can disagree, but you can't change my words to make believe I said only eliminate taxes and never increase. I specifically called for an increase and even outright implementation of a new tax.

 

I distinguish local governments from state and federal because most of their work is right there servicing the pragmatics of the people, the infrastructure. Building roads, police, fire and all that - truly government services that I fully support. Unlike the political games at the state and federal level where the need for their services are more debatable due to differing political philosophies. Other than entrenched crony capitalism and their methods of taxation, I don't have a lot of criticism of local governments. They can be wasteful, but I suspect more honest work from them.

 

No, you've categorically dismissed an increase in income tax as being from resentment or hatred of the rich. IOW, a solution has been proffered that you say you agree with, in principle, but when the specifics come out all you have done is appeal to emotion.

 

The federal government builds infrastructure, too. Federal funding go to highways and bridges, which are crucial to interstate traffic.

 

 

I'm trying to figure out where this question came from and how it relates to what I wrote. I said that to complain about Romney's capital gains is to imply that it would have been better if he didn't invest that money at all, and received no capital gains for anyone to complain about. That's the resentment I'm talking about...how is it good for society for him not to invest? How do we benefit *more* from him sitting on his money?

 

That's a non-sequitur. He doesn't have to sit on the money. And probably wouldn't, because even at a higher tax rate, he would still end up with more money if he invested than if he sat on it.

 

 

The resentment and complaints suggest to me that people are more concerned with what someone in particular is gaining rather than the system as a whole. It's as if they'd complain about his capital gains even if he was writing checks directly to the American people. They are not focused on the system, just one node that offends them. It's class resentment, not reason.

 

Observing that the deficits would be smaller and that historically the economy did quite well under the previous tax system is not class resentment, it's focusing on the system. Especially in light of the "job creator" argument, which folds like a house of cards under scrutiny.

[ParanoiA]

No, you've categorically dismissed an increase in income tax as being from resentment or hatred of the rich. IOW, a solution has been proffered that you say you agree with, in principle, but when the specifics come out all you have done is appeal to emotion.

 

Prove it. Where did I write that any increase in income tax is being from resentment or hatred of the rich? You're getting sloppy here. I have repeatedly said that disproportionate taxation is wrong. Increasing income tax on the *rich* exclusively is wrong, not on the whole. Although, I would stand against such taxes because I want to see income tax eliminated, not further invested in. But don't now conflate that position to mean, yet again, that I don't expect to raise taxes somewhere else to compensate.

 

And yes, appealing to emotion is exactly what we do when we are seeking equal treatment of minorities, as well as reason. You dismiss the rich as a minority with an offensive, convenient argument that their money equals more speech. At best, their money equals amplified speech of the same minority number of total voices. A majority has a more voices, more minds, more people, more advantage to create speech and counter speech.

 

And to reason that someone has the "abilility" to trade in their property in order to speak and that somehow makes them even with a majority is laughable. That they have a workaround to at least amplify their speech as the citizenry gathers their pitchforks is a small advantage over other minority groups - it does not make them anywhere close to a majority voice.

 

I did not say we should all bleed and cry for rich people. I don't do that for gay people, nor any other minority group. It's the principle of equality that we are ignoring when we institutionalize bigotry of a minority group. In this case, disproportionate taxation while still carrying the blame of "not paying their fair share" as well as destroying the financial market. Yeah, all 3 million American millionaires all acted in concert to destroy the financial market, and all 3 million American millionaires take from poor, keep them poor, blah blah blah...big oil, Wal-Mart, golden parachutes, Enron... They all get lumped in together as one coordinated group responsible for all these terrible things. Black folks can relate to that.

 

It's not ok to stereotype and then execute policy based on it. Right now, the rich are being stereotyped and painted with broad strokes and policy is directly referenced to it. Everytime Obama says "they need to pay their fair share", when they clearly pay way more than their "fair" share.

 

 

That's a non-sequitur. He doesn't have to sit on the money. And probably wouldn't, because even at a higher tax rate, he would still end up with more money if he invested than if he sat on it.

 

Pardon me, but this is obfuscation. You ignored the point I made and appear to have no argument.

 

The implication by the outrage is that if he had not invested in any of this, and made no money, and no offensive capital gains, then no one would be outraged. And I ask how that is good for society? How is that good for us?

 

We set the capital gains rate, it's not a market emergence. We know what it is because we declare it. It's set low at 15% to encourage activity. Then we get activity, and get outraged at the low tax rate...the..one...we....set...deliberately? Why the hell did we set it so low if we're offended by it? This is the kind of contradictory silliness you get with class warfare. It's on like Donkey Kong.

 

That point is important and those who cannot or will not address it are likely engaged in it themselves.

 

Observing that the deficits would be smaller and that historically the economy did quite well under the previous tax system is not class resentment, it's focusing on the system. Especially in light of the "job creator" argument, which folds like a house of cards under scrutiny.

 

Kind of like this argument since "observing that the deficits would be smaller and that historically the economy did quite well under the previous tax system" may be what you are doing, but has *nothing* to do with the populist offense to Romney's capital gains.

[swansont]

Prove it. Where did I write that any increase in income tax is being from resentment or hatred of the rich? You're getting sloppy here. I have repeatedly said that disproportionate taxation is wrong. Increasing income tax on the *rich* exclusively is wrong, not on the whole. Although, I would stand against such taxes because I want to see income tax eliminated, not further invested in. But don't now conflate that position to mean, yet again, that I don't expect to raise taxes somewhere else to compensate.

Now you're just waffling. The proposed increase in taxes was under discussion and you posted — in response to that (emphasis added):

 

You just have to get a potential difference of money and minority on one side, and bigotry and majority on the other and viola! That's what we have today. Rationalizing hating a minority (rich) and then using that rationale to take their property.

 

We have a rich history of rationalization and hatred in this country.

 

So are you now arguing that this was not in response to the passage you quoted in that post?

 

And yes, appealing to emotion is exactly what we do when we are seeking equal treatment of minorities, as well as reason. You dismiss the rich as a minority with an offensive, convenient argument that their money equals more speech. At best, their money equals amplified speech of the same minority number of total voices. A majority has a more voices, more minds, more people, more advantage to create speech and counter speech.

If you find that offensive, blame the Citizens United ruling that made it so, not me. As far as 1% being a minority is concerned, that's basic math and statistics. Again, not my doing at all. Saying that it's not more speech but is amplified speech is a contradiction also rooted in mathematics.

 

As far as the appeal to emotion issue goes, I was asking for factual evidence. Appeal to emotion doesn't cut it.

 

And to reason that someone has the "abilility" to trade in their property in order to speak and that somehow makes them even with a majority is laughable. That they have a workaround to at least amplify their speech as the citizenry gathers their pitchforks is a small advantage over other minority groups - it does not make them anywhere close to a majority voice.

They have the ability to do something that others cannot, yet we are talking about rights here. You are saying that they are more equal.

 

I did not say we should all bleed and cry for rich people. I don't do that for gay people, nor any other minority group. It's the principle of equality that we are ignoring when we institutionalize bigotry of a minority group. In this case, disproportionate taxation while still carrying the blame of "not paying their fair share" as well as destroying the financial market. Yeah, all 3 million American millionaires all acted in concert to destroy the financial market, and all 3 million American millionaires take from poor, keep them poor, blah blah blah...big oil, Wal-Mart, golden parachutes, Enron... They all get lumped in together as one coordinated group responsible for all these terrible things. Black folks can relate to that.

Quite the straw man you've built there. No wonder it's so easy to tear down.

 

It's not ok to stereotype and then execute policy based on it. Right now, the rich are being stereotyped and painted with broad strokes and policy is directly referenced to it. Everytime Obama says "they need to pay their fair share", when they clearly pay way more than their "fair" share.

Again with an appeal to emotion by calling it a stereotype. You have to define what "fair" is.

 

padren made the point earlier that someone with $2000 in assets should not pay the same insurance premium as someone with $1,000,000 in assets. I agree. Why do you disagree? That if you have more to protect, that you might have to pay more to protect it? You speak of people with pitchforks. Who has more to lose from that scenario? Are they going to march against the destitute?

 

 

Pardon me, but this is obfuscation. You ignored the point I made and appear to have no argument.

 

The implication by the outrage is that if he had not invested in any of this, and made no money, and no offensive capital gains, then no one would be outraged. And I ask how that is good for society? How is that good for us?

 

And the obfuscation here — and the point of my response — is that you've created a straw man. You are the one who is claiming that no money would have been invested. And yet, when the capital gains and income taxes were higher, people invested lots of money. So is that meant to be a serious scenario, that Romney would not have invested money? When it's clear that he did, because he was at Bain when Clinton was president, and the higher tax rates were in effect.

[ParanoiA]

Now you're just waffling. The proposed increase in taxes was under discussion and you posted — in response to that (emphasis added):

 

Right, the proposed increase in taxes - in the video - are aimed at the rich. That is the context of this thread, that Dick Morris was speaking to non-typical wage earners making over 250K about how their taxes are going to go up. Disproportionate taxation, just as I said.

 

And further, I would support any elimination of property taxes by shifting the revenue source to other methods of taxation. Ideally, sales tax for all revenue collection. But I'd even support shifting the burden to income taxes if I had to. Really prefer not though. Does that clear up any confusion?

 

If you find that offensive, blame the Citizens United ruling that made it so, not me. As far as 1% being a minority is concerned, that's basic math and statistics. Again, not my doing at all. Saying that it's not more speech but is amplified speech is a contradiction also rooted in mathematics.

 

It's not a contradiction at all. A single person's speech amplified to 20 thousand voices is *not* the same as 20 thousand people speaking. That's 20 thousand brains verses one. 20 thousand people to create, imagine, counter and speak back. There is a difference between speech that is repeated over and over and new speech that is created over and over.

 

Quite the straw man you've built there. No wonder it's so easy to tear down.

 

 

It's not a strawman because it's not a counter to any argument you have made. I introduced the material for others that are reading this thread. Hopefully they see the similarity between "black people are criminals" and "rich people are criminals".

 

And the obfuscation here — and the point of my response — is that you've created a straw man. You are the one who is claiming that no money would have been invested. And yet, when the capital gains and income taxes were higher, people invested lots of money. So is that meant to be a serious scenario, that Romney would not have invested money? When it's clear that he did, because he was at Bain when Clinton was president, and the higher tax rates were in effect.

 

Where? Show me.

 

Sincerely Swanston, you have misunderstood what I have written. Maybe that's my fault, I have no interest in sideways spats.

 

I'm going to try this one more time....please read carefully.

 

When people are outraged that Mitt Romney only paid 15% in capital gains, then the implication to me is that if he had not invested any of that money (which I concede he would even though that has nothing to do with this point) that it would have been better. It implies that it was bad for one person to invest lots of money, because investment return is taxed at 15% (the rate we set), too good for one person to enjoy.

 

Otherwise why wouldn't they be outraged that *everyone* rich or not, was only paying 15% capitial gains? That's why I made the point that we *set* the capital gains rate, so we know it is lower than wage income, and we did that, presumably to encourage investment activity. Romney is one such person successfully enticed to invest, and so he did, and now we're outraged? And we're *not* outraged at the capital gains rate?

 

No one is crying about the capital gains rate, only that Mitt Romney got to enjoy that rate with everyone else. That, sir, is how you cut off your nose to spite your face.

[iNow]

The issue is that he can pay a lower rate because he is already rich. That creates an unfair advantage since those in poverty don't have capital gains and hence cannot take advantage of that lower rate. It's a gaming of the system that favors the growth of the inequality gap, and the argument is not against the idea that these people are rich, but against the idea that their richness should open them up to having to pay less as a percentage than the ordinary citizen. The idea is that we should all pay roughly equivalent rates, NOT 35% if you make less than $20K a year and 13% if you make more than $20B a year.

[ParanoiA]

The issue is that he can pay a lower rate because he is already rich. That creates an unfair advantage since those in poverty don't have capital gains and hence cannot take advantage of that lower rate. It's a gaming of the system that favors the growth of the inequality gap, and the argument is not against the idea that these people are rich, but against the idea that their richness should open them up to having to pay less as a percentage than the ordinary citizen. The idea is that we should all pay roughly equivalent rates, NOT 35% if you make less than $20K a year and 13% if you make more than $20B a year.

 

Sorry but that's not the issue. Everyone can make capital gains, rich or not. And if capital gains were only the tool of the rich, then I ask again, why is the rate set at 15%? Everyone pays that rate. And every ordinary citizen pays the same as him on their capital gains. It doesn't matter if they make less than 20 grand or more 20 billion - they all pay the same.

 

No, the issue is this: That the *only* income he gained was from investment. He didn't work a job. Because if he had wage income to be taxed, his taxes in general would have been higher, like most other wealthy folk that work. The offense would not be any more realized than any other rich candidate running for president.

 

But the problem was he didn't work a job, or at least didn't earn a wage, so the only income he got was capital gains which is set low to entice investment, and thus the offense of only paying 15% in taxes and the offense that someone could have so much investment money that they don't need to work a job. Again, it's resentment.

 

Let me ask you this...if Romney earned no income from capital gains, nor wages, nothing to report, but still possessed his billions, would you want to tax him?

[Moontanman]

Sorry but that's not the issue. Everyone can make capital gains, rich or not. And if capital gains were only the tool of the rich, then I ask again, why is the rate set at 15%? Everyone pays that rate. And every ordinary citizen pays the same as him on their capital gains. It doesn't matter if they make less than 20 grand or more 20 billion - they all pay the same.

 

No, the issue is this: That the *only* income he gained was from investment. He didn't work a job. Because if he had wage income to be taxed, his taxes in general would have been higher, like most other wealthy folk that work. The offense would not be any more realized than any other rich candidate running for president.

 

But the problem was he didn't work a job, or at least didn't earn a wage, so the only income he got was capital gains which is set low to entice investment, and thus the offense of only paying 15% in taxes and the offense that someone could have so much investment money that they don't need to work a job. Again, it's resentment.

 

Let me ask you this...if Romney earned no income from capital gains, nor wages, nothing to report, but still possessed his billions, would you want to tax him?

 

 

I'd want to tax him the same way everyone else is taxed, why is that not fair? BTW, I've never had capital gains tax, I never made any money other than wages, why should capital gains be taxed any different than wages?

[iNow]

Everyone can make capital gains, rich or not.

This is one of those instances where your ideology is causing you to disconnect from reality. How is a person who is barely making it by going to ever be able to invest in something that might earn capital gains?

[waitforufo]

I'd want to tax him the same way everyone else is taxed, why is that not fair? BTW, I've never had capital gains tax, I never made any money other than wages, why should capital gains be taxed any different than wages?

 

Let me give you two reasons why capital gains should be taxed a lower rates than income.

 

The first reason is best explained by example. You work for a wage. You pay taxes on that wage. You save your post tax dollars. With those post tax dollars you purchase an investment. Years later you sell that investment for dollars. Over the period of your investment there was inflation. So when you sell your investment, some of the dollars you receive simply account for inflation. To tax those inflated gains is simply increasing the income tax that was paid in the past. Why should people be taxed for saving for future security? You think that is fair?

 

The second reason is because a lower capital gains tax encourages investors to take gains when they are available thereby incurring taxable events. The more they incur these events the more tax they pay. Government revenue goes up when the capital gains tax is lower than the income tax rate. Think of it this way. I saved my entire life for retirement, but I have to be careful spending my money because I just might run out before I die. But I check my investment portfolio and find that my stock in XYZ Corporation has had significant gains. If I sell some of my XYZ Corporation I can take that trip to Yosemite Valley I always wanted to take. When penciling out the expenses I have to consider taxes. If the taxes are too high I’ll stay home and hope my investment grows some more so that maybe next year I can go. If taxes are low maybe I can sell a little bit of XYZ every year and go on a trip every year. See, more taxable events and yearly revenue for the government and more happiness for retired people. Why do you think this is bad?

 

I agree with ParanoiA. Those that want a higher capital gains tax are simply resentful. You just can’t stop looking in other people’s wallets. Why do you even care? You would screw middle class people with modest retirement savings in an attempt to get at the money of the super-rich. You would do it even if it reduced government revenue. Is such behavior even sane?

 

Your problem is that you think it is possible to tax the super-rich. They’re super-rich for a reason. They know how to keep their wealth. They know how to pass their tax burdens on to others. It’s like corporate taxes. Why not just call corporate taxes sales taxes. Corporations just pass their tax burdens on to their customers, or they screw their employees. Why not just accept that fact that middle class people ultimately pay all the taxes. You will sleep better at night if you do.

[Athena]

When my income goes up by 10X I'll begin to think of worrying...

 

That is the attitude most had when only the rich were going to have their income taxed. Most people thought they would never earn enough money to worry about paying income taxes. Somehow throughout history, money and power have gone together, and those who have it don't pay taxes. It was the little guy barely surviving who had to pay the taxes.

 

Let me give you two reasons why capital gains should be taxed a lower rates than income.

 

The first reason is best explained by example. You work for a wage. You pay taxes on that wage. You save your post tax dollars. With those post tax dollars you purchase an investment. Years later you sell that investment for dollars. Over the period of your investment there was inflation. So when you sell your investment, some of the dollars you receive simply account for inflation. To tax those inflated gains is simply increasing the income tax that was paid in the past. Why should people be taxed for saving for future security? You think that is fair?

 

The second reason is because a lower capital gains tax encourages investors to take gains when they are available thereby incurring taxable events. The more they incur these events the more tax they pay. Government revenue goes up when the capital gains tax is lower than the income tax rate. Think of it this way. I saved my entire life for retirement, but I have to be careful spending my money because I just might run out before I die. But I check my investment portfolio and find that my stock in XYZ Corporation has had significant gains. If I sell some of my XYZ Corporation I can take that trip to Yosemite Valley I always wanted to take. When penciling out the expenses I have to consider taxes. If the taxes are too high I'll stay home and hope my investment grows some more so that maybe next year I can go. If taxes are low maybe I can sell a little bit of XYZ every year and go on a trip every year. See, more taxable events and yearly revenue for the government and more happiness for retired people. Why do you think this is bad?

 

I agree with ParanoiA. Those that want a higher capital gains tax are simply resentful. You just can't stop looking in other people's wallets. Why do you even care? You would screw middle class people with modest retirement savings in an attempt to get at the money of the super-rich. You would do it even if it reduced government revenue. Is such behavior even sane?

 

Your problem is that you think it is possible to tax the super-rich. They're super-rich for a reason. They know how to keep their wealth. They know how to pass their tax burdens on to others. It's like corporate taxes. Why not just call corporate taxes sales taxes. Corporations just pass their tax burdens on to their customers, or they screw their employees. Why not just accept that fact that middle class people ultimately pay all the taxes. You will sleep better at night if you do.

 

Oh come on. How many people earn enough to buy a house and medical insurance, let alone investing their money for retirement? It takes money to make money and people working for a wage are lucky if they can rent and stay healthy enough to avoid medical expenses, because they can't afford insurance. There are only so many hours in the day, and may God have mercies on the poor soul who must depend on trading his labor for all his needs.

 

Resentful? of what? Admittedly I sometimes, wish I had been born male and raised by my father, because that would have given me far more advances than being born female and being raised by the woman he dumped, but I don't even come close to resenting my half brother who got all the advantages I didn't get. I just see the other side of reality. The side can not live off their money.

 

The GI bill was a great boon to us, because it put so many men in college, when new technologies were ready to bloom. It took relatively very little education for these men to get in on the bottom of floor, and enjoy upward economic mobility. The story was very different for the women who worked during the war years and were laid off when the men came home, or who were dumped with their children, and prevented from entering colleges and careers. Women who had advantaged fathers, who were okay with them entering science or business, did much better than the women who had no fathers, or insisted the only fit thing for a woman is to marry and care for a family. This reality does not necessarily lead to resentment, because their are those who believe there is value in serving, and do so without much pay, or maybe no pay at all.

 

These people are not less deserving, they have different values, and basic to those the values is the belief that we work together and care for each other. The rich get rich off these people, and if they can't rich enough off the US laborer, they exploit labor somewhere else. Perhaps they should move to where their money is being invested?

 

When the investor lived in the same town as his factory, human nature lead to more caring relations with those in his community. However, the Appalachia's were gutted of their wealth, leaving environment disaster and poverty in the wake by investors who never lived there. Now investors are doing this around the world, and we are paying a huge price for the military defense of this activity. Many are profiting nicely with government contracts for supplying the Military Industrial Complex, but it is not the average laborer. It is said we are a democracy, and we are asked to give our sons, and fathers to defend our country, but the economic system doesn't look very democratic to me. "We the people", you know, the people who are suppose to have self government, and might want to do something about having autocratic industry that guts their country of wealth, exploits them, and then moves on to exploit the land and labor of others. I think a more reasonable way of managing things, is investing in the land and people. That is what results in national wealth and a decent standard of living, on which we all depend.

 

The US begins with a policy in James Town, where by if you don't work, you don't eat. There are some benefits to that rule. I will add to it, if you don't live here, you can't own it.

Edited August 11, 2012 by Athena

[John Cuthber]

This example from waitforufo

"The first reason is best explained by example. You work for a wage. You pay taxes on that wage. You save your post tax dollars. With those post tax dollars you purchase an investment. Years later you sell that investment for dollars. Over the period of your investment there was inflation. So when you sell your investment, some of the dollars you receive simply account for inflation. To tax those inflated gains is simply increasing the income tax that was paid in the past. Why should people be taxed for saving for future security? You think that is fair?

"

suggests that the income from capital gains is always a long term thing. In particular this "Over the period of your investment there was inflation. So when you sell your investment, some of the dollars you receive simply account for inflation. " suggests that a significant part in the rise in cash value of the investment is due to inflation.

However,

if I buy some shares today, then sell them at a profit tomorrow inflation isn't responsible for that money I made.

It's just income (if you like, its money I made by me being clever at judging the future price of shares in much the same way that footballers make money by being clever at kicking a ball about).

So yes, I think it is perfectly fair that it is taxed as income.

 

His second example

"The second reason is because a lower capital gains tax encourages investors to take gains when they are available thereby incurring taxable events. The more they incur these events the more tax they pay. Government revenue goes up when the capital gains tax is lower than the income tax rate. Think of it this way. I saved my entire life for retirement, but I have to be careful spending my money because I just might run out before I die. But I check my investment portfolio and find that my stock in XYZ Corporation has had significant gains. If I sell some of my XYZ Corporation I can take that trip to Yosemite Valley I always wanted to take. When penciling out the expenses I have to consider taxes. If the taxes are too high I'll stay home and hope my investment grows some more so that maybe next year I can go. If taxes are low maybe I can sell a little bit of XYZ every year and go on a trip every year. See, more taxable events and yearly revenue for the government and more happiness for retired people. Why do you think this is bad?"

 

fails because it doesn't take account of the other outcome.

It says " I have to be careful spending my money because I just might run out before I die."

The other scenario is that someone dies before the money runs out.

That money (possibly after death duties) goes to the next of kin who gets this "windfall".

They might decide to invest it for their own retirement, but they may well choose to take the same trip to Yosemite.

If anything, they are more likely to do so because there's simply more money per capita in the system.

(the system here is the original investor and their next of kin. when one dies the amount invested doesn't change much and the one left behind gets richer).

 

And, like iNow, I'd still like to see ParanoiA back up the assertion that "Everyone can make capital gains, rich or not."

[waitforufo]

Oh come on. How many people earn enough to buy a house and medical insurance, let alone investing their money for retirement?

 

Many people do. Almost all frugal middle class people do. All of my parent's generation did it. All of my siblings and cousins are currently achieving this goal. I'm not sure how old you are, but when I was in my 20s and 30s this goal seemed near impossible. Now that I am in my 50s the only thing that will stop me from achieving this goal is the government taking my savings and giving it to people the government feels are more entitled to it than the guy that earned it, me. Go figure.

 

Maybe you just don't want to work as hard as I have. I say you should stop worrying about things that don't belong to you. Go make your own money. You will be happier if you do.

 

This example from waitforufo suggests that the income from capital gains is always a long term thing. In particular this "Over the period of your investment there was inflation. So when you sell your investment, some of the dollars you receive simply account for inflation. " suggests that a significant part in the rise in cash value of the investment is due to inflation.

However,

if I buy some shares today, then sell them at a profit tomorrow inflation isn't responsible for that money I made.

It's just income (if you like, its money I made by me being clever at judging the future price of shares in much the same way that footballers make money by being clever at kicking a ball about).

So yes, I think it is perfectly fair that it is taxed as income.

 

Capital gains income from assets held one year or less is taxed at the ordinary income tax rates in effect for the year. So no you can't buy today and sell tomorrow and pay a tax based on the capital gains rate.

 

Also, in stock and bond trading sometimes you gain and sometimes you lose. While everything you gain in a year is taxed that year, you can only write down $3k. Yeah, you can push losses from one year into following years, I think for ten years, but that leads to interesting tax calculations. For example if I have two investments and one gains by $10k and one declines by $10k and I sell them both for a net gain of $0 I have to pay capital gains tax on $7k if the gaining investment was held for a year. This is how the government tries to help people get ahead? For every two steps one takes forward toward financial independence the government takes one of those steps back. Perhaps this is why Athena doesn't think she can attain what is rather common in America.

 

His second example fails because it doesn't take account of the other outcome.

I don't get your point? What about other income. It is taxed at the regular income tax rate. On that other income I believe the marginal rate is determined by ones full income which includes income from capital gains. If my belief is correct, capital gains do increase your income tax rate on other income.

 

The other scenario is that someone dies before the money runs out.

That money (possibly after death duties) goes to the next of kin who gets this "windfall".

 

So my parents worked their entire adult lives, raised a family, purchased a modest home, and set aside a nest egg for their golden years so as not to be a burden on their children in retirement. My entire family made sacrifices in achieving this goal. From the food we ate, the clothes we wore, the colleges we attended, and so on. My father is gone now and I hope my mother can enjoy the time she has left with the investments my parents made. When she does die, I hope she is broke and that she enjoyed the money she saved with my Father. My guess is when she does die, there will be money left to me and my siblings. You refer to this as a "windfall", as if it is somehow ill gotten gains. This statement implies that I and my siblings will be steeling from you and the greater society when my mother dies. What makes others more entitled to the fruit of my parents efforts then their children?

 

Again, I say people of such a mindset are resentfully coveting the property of others. Stop worrying about what other people have. That wealth belongs to no one but them. Go make your own money and stop looking in my mom's purse.

[rigney]

Many people do. Almost all frugal middle class people do. All of my parent's generation did it. All of my siblings and cousins are currently achieving this goal. I'm not sure how old you are, but when I was in my 20s and 30s this goal seemed near impossible. Now that I am in my 50s the only thing that will stop me from achieving this goal is the government taking my savings and giving it to people the government feels are more entitled to it than the guy that earned it, me. Go figure.

 

Maybe you just don't want to work as hard as I have. I say you should stop worrying about things that don't belong to you. Go make your own money. You will be happier if you do.

 

 

 

Capital gains income from assets held one year or less is taxed at the ordinary income tax rates in effect for the year. So no you can't buy today and sell tomorrow and pay a tax based on the capital gains rate.

 

Also, in stock and bond trading sometimes you gain and sometimes you lose. While everything you gain in a year is taxed that year, you can only write down $3k. Yeah, you can push losses from one year into following years, I think for ten years, but that leads to interesting tax calculations. For example if I have two investments and one gains by $10k and one declines by $10k and I sell them both for a net gain of $0 I have to pay capital gains tax on $7k if the gaining investment was held for a year. This is how the government tries to help people get ahead? For every two steps one takes forward toward financial independence the government takes one of those steps back. Perhaps this is why Athena doesn't think she can attain what is rather common in America.

 

 

I don't get your point? What about other income. It is taxed at the regular income tax rate. On that other income I believe the marginal rate is determined by ones full income which includes income from capital gains. If my belief is correct, capital gains do increase your income tax rate on other income.

 

 

 

So my parents worked their entire adult lives, raised a family, purchased a modest home, and set aside a nest egg for their golden years so as not to be a burden on their children in retirement. My entire family made sacrifices in achieving this goal. From the food we ate, the clothes we wore, the colleges we attended, and so on. My father is gone now and I hope my mother can enjoy the time she has left with the investments my parents made. When she does die, I hope she is broke and that she enjoyed the money she saved with my Father. My guess is when she does die, there will be money left to me and my siblings. You refer to this as a "windfall", as if it is somehow ill gotten gains. This statement implies that I and my siblings will be steeling from you and the greater society when my mother dies. What makes others more entitled to the fruit of my parents efforts then their children?

 

Again, I say people of such a mindset are resentfully coveting the property of others. Stop worrying about what other people have. That wealth belongs to no one but them. Go make your own money and stop looking in my mom's purse.

I would shout a big "AMEM" to your total statement, but then someone might think I was religious and agreeing with you. Yes, today as it has always been; everyone is concerned that you might have a nickel or two more in your pocket than they do. I believe it is referred to as "Jealousy". At eighty I still have a bit of change in my pocket and I'd sure as hell like to keep it. But if I were rich, I'd be leaving right now for Tim Buk 2 or 3. Edited August 12, 2012 by rigney

[swansont]

It's not a strawman because it's not a counter to any argument you have made. I introduced the material for others that are reading this thread. Hopefully they see the similarity between "black people are criminals" and "rich people are criminals".

Straw men are straw men, whether in response or offered as an argument on their own. Who has claimed that rich people are criminals?

 

Where? Show me.

 

I said that to complain about Romney's capital gains is to imply that it would have been better if he didn't invest that money at all, and received no capital gains for anyone to complain about. That's the resentment I'm talking about...how is it good for society for him not to invest? How do we benefit *more* from him sitting on his money?

 

And even before that, since this was you repeating the claim. You offered the option of today's tax system or one in which Romney makes no investment whatsoever.

 

 

Sincerely Swanston, you have misunderstood what I have written. Maybe that's my fault, I have no interest in sideways spats.

 

I'm going to try this one more time....please read carefully.

 

When people are outraged that Mitt Romney only paid 15% in capital gains, then the implication to me is that if he had not invested any of that money (which I concede he would even though that has nothing to do with this point) that it would have been better. It implies that it was bad for one person to invest lots of money, because investment return is taxed at 15% (the rate we set), too good for one person to enjoy.

 

No, absolutely not. The implication is that if he had paid a higher capital gains, the exact same economic benefit would be there from the investment, and more benefit would accrue because some extra money went to run the government and safeguard the system that allows him to make the profit in the first place. Romney would still end up with a lot more money than he originally had.

 

Otherwise why wouldn't they be outraged that *everyone* rich or not, was only paying 15% capitial gains? That's why I made the point that we *set* the capital gains rate, so we know it is lower than wage income, and we did that, presumably to encourage investment activity. Romney is one such person successfully enticed to invest, and so he did, and now we're outraged? And we're *not* outraged at the capital gains rate?

 

I think people have been outraged at the current tax system for the entire decade it's been in place. It's only coming to the forefront because Romney is running and because the tax break is due to expire. (It was supposed to expire in 2010, but was extended) And yes, the outrage is about the low tax rates that high-income people have enjoyed for the last decade. It was promised that it would benefit everyone, but it didn't. It primarily benefitted those with high incomes.

 

Presumably, it was to encourage investment. That's how it was sold to the people. Do you have any evidence that it actually did that? Because wage expansion under Bush was anemic, and much of the economic growth was spurred by low interest rates, with people refinancing their mortgages and taking out equity, which they then spent.

 

No one is crying about the capital gains rate, only that Mitt Romney got to enjoy that rate with everyone else. That, sir, is how you cut off your nose to spite your face.

Not for me. Mitt is only a symptom. The poster child.

[John Cuthber]

"You refer to this as a "windfall", as if it is somehow ill gotten gains."

There's nothing ill-gotten about windfalls- they are just unpredictable.

http://en.wikipedia.org/wiki/Windfall_gain

 

So, it's more than likely that you and your siblings will end up with money that you didn't earn (your parents sort-of did by making investments).

I don't see the problem with taxing that income.

[swansont]

Sorry but that's not the issue. Everyone can make capital gains, rich or not. And if capital gains were only the tool of the rich, then I ask again, why is the rate set at 15%? Everyone pays that rate. And every ordinary citizen pays the same as him on their capital gains. It doesn't matter if they make less than 20 grand or more 20 billion - they all pay the same.

No, that's not true. Long-term capital gains are tiered with income. The rate for those not in the lowest tax brackets is set at 15% (the lowest it's ever been) because rich people got congress and the president to lower it from 20%, so they could get richer, to the detriment of the country, since spending was not reduced accordingly.

 

Let me ask you this...if Romney earned no income from capital gains, nor wages, nothing to report, but still possessed his billions, would you want to tax him?

If he had been taxed on getting that money, then no. Nobody is saying tax him because he's worth whatever he's worth.

 

———

 

For example if I have two investments and one gains by $10k and one declines by $10k and I sell them both for a net gain of $0 I have to pay capital gains tax on $7k if the gaining investment was held for a year.

No, that's not right. You need to get a better accountant. The $3k loss limit is on net losses. There's a whole ream of "advice" on selling your losses to offset gains to reduce your tax burden. If you sell a $10k gain and a $10k loss, your cap gains tax liability is zero.

 

If your capital losses exceed your capital gains, the amount of the excess loss that can be claimed is the lesser of $3,000, ($1,500 if you are married filing separately) or your total net loss

http://www.irs.gov/taxtopics/tc409.html

 

I agree with ParanoiA. Those that want a higher capital gains tax are simply resentful.

How do you explain the people with high incomes who also agree that the tax rates are too low?

[John Cuthber]

"Those that want a higher capital gains tax are simply resentful."

Damned right I'm resentful.

I resent being charged tax at a higher marginal rate on my income than people who can better afford to pay, just because I'm not rich and powerful enough to ensure that the system is fair.

 

It is true to say that rich people are the ones who make the most money from capital gains and it's true that this leads to a regressive tax system.

Most people say they want a progressive tax system. Some prefer a flat tax (and I rather suspect that those people tend to be rich).

I don't know anyone who openly advocates a regressive tax regimen (one where the % tax you pay falls as your income rises).

But they do advocate a lower rate forcapital gains because they can thereby hide the intention to avoid paing tax.

[iNow]

Many people [in the middle class invest and own property]. Almost all frugal middle class people do.

Citation needed. This appears to be central to your rebuttal, but relies on a huge assumption. I know facts can get in the way of a good narrative, but facts show that nearly 40% of middle class families are living paycheck to paycheck, nearly 45% of middle class families have no savings to cushion themselves or provide wiggle room, and approximately half of all americans are now classified as at or below the poverty line (a growth of 4 million people since 2009). Of those who are unemployed, 63% of them have had to dip into their retirement savings just to make ends meet, and the rate of foreclosures on homes has been consistently at record highs for the past decade.

 

http://www.consumerfed.org/news/560

http://www.realtytrac.com/trendcenter/trend.html

 

Those circumstances speak rather strongly against ParanoiAs claim that everyone can invest and "earn capital gains," and it speaks rather strongly against your unsupported claim that "almost all middle class people" invest and own property.

 

 

Maybe you just don't want to work as hard as I have. I say you should stop worrying about things that don't belong to you. Go make your own money.

This is where YOUR comments disconnect from reality. For people to work, new hiring must take place. Without that hiring activity, people who "want to work" cannot. Your assumption only holds in a market where jobs are freely available to all who one want. We are not presently existing in that market.

 

Again, I say people of such a mindset are resentfully coveting the property of others.

And you can say that all you want, but merely repeating yourself and ignoring all of the facts on the ground won't magically make you correct. Just because you think that's true doesn't mean it is.

 

I agree with ParanoiA. Those that want a higher capital gains tax are simply resentful.

How do you explain the people with high incomes who also agree that the tax rates are too low?

A very solid counterpoint and rebuttal that will almost certainly be ignored or brushed aside with hand waving.

[John Cuthber]

Talking of counterpoints that get ignored., and at the risk of repeating myself.

 

like iNow, I'd still like to see ParanoiA back up the assertion that "Everyone can make capital gains, rich or not."

[iNow]

Given the absolute nature used when framing the comment, all it takes is one counter example to prove it wrong... One single person who is NOT in a position to be able to earn capital gains. I'm fairly certain there are far more than just one person out there who fit that criteria.