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Politics : Formerly About Advanced Micro Devices
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To: Road Walker who wrote (351303)9/28/2007 4:20:10 PM
From: TimF  Read Replies (1) of 1576160
 
re: If you have lower taxes on investment in some areas than others, than all else being equal investment will tend to shift to the lower taxed areas.

But we don't. Unless you are thinking municipal bonds I don't know what you are talking about.

In this case "some areas", doesn't represent "some types of investment", but rather some countries.

Why should passive investments be taxed at 15% while working people are taxed at 30 something percent... twice as much?

1 - I'd be fine also taxing the worker 15%.

2 - Most workers only pay 30% if you include the payroll taxes that are supposed to be justified as social insurance. In particular in the case of SS retirement, funds that you earn that aren't wages, and don't get taxed for SS, don't count towards receiving SS benefits later on.

3 - As a purely practical matter investment capital moves around to different nations quicker and easier than labor does. So tax it at a fairly high rate and your more likely to lose it.

4 - Lower taxes for investment tends to result in more investment, improving productivity and in the long run employee compensation. OTOH high taxes chase away investment which tends to cause a hit in both jobs and compensation per employee.

5 - The shareholders are part owners in a corporation. Their ownership stake already gets taxed by the corporate income tax. I know this argument doesn't apply as well, or at all to non-share investments, but investment in shares are a big part of the issue. Well you could make cap gains higher and lower or eliminate the corporate income tax, but that doesn't tend to play as well politically.

6 - Capital gains tax isn't adjusted for inflation. You can get taxed on a gain that isn't a gain in real terms or is even a loss.
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