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Politics : Mainstream Politics and Economics -- Ignore unavailable to you. Want to Upgrade?

To: i-node who wrote (50216)	8/4/2013 3:34:25 PM
From: Broken_Clock	Respond to of 85487

Larry Summers is a shameless wall st. shill. Even he admits: "The richest 2% of Americans receive more than 50% of all capital gains." nber.org or, if you prefer: For the very richest Americans, low tax rates on capital gains are better than any Christmas gift. As a result of a pair of rate cuts, first under President Bill Clinton and then under Bush, most of the richest Americans pay lower overall tax rates than middle-class Americans do. And this is one reason the gap between the wealthy and the rest of the country is widening dramatically.... Advocates for a low capital gains rate say it spurs more investment in the U.S. economy, benefiting all Americans. But some tax experts say the evidence for that theory is murky at best. What is clear is that the capital gains tax rate disproportionately benefits the ultra-wealthy. Most Americans depend on wages and salaries for their income, which is subject to a graduated tax so the big earners pay higher percentages. The capital gains tax turns that idea on its head, capping the rate at 15 percent for long-term investments. As a result, anyone making more than $34,500 a year in wages and salary is taxed at a higher rate than a billionaire is taxed on untold millions in capital gains. articles.washingtonpost.com

To: i-node who wrote (50216)	8/4/2013 3:40:52 PM
From: Broken_Clock	Read Replies (1) \| Respond to of 85487

I understand vey well. The tax laws are lobbied into existence by billionaires for their benefit. Of course you must hate that type of regulation, right? Over half — 54 percent — of all capital gains and dividend income flows to the 0.2 percent of households with annual incomes over $1 million. More than three-quarters — 78 percent — of this income goes to those households with income over $200,000, which account for about 3 percent of all households. In contrast, only 11 percent of capital gains and dividend income goes to the 86 percent of households with incomes of less than $100,000. Only 4 percent of this income flows to the 64 percent of households that have income of less than $50,000. cbpp.org

To: i-node who wrote (50216)	8/4/2013 4:40:35 PM
From: TimF	1 Recommendation Recommended By i-node Respond to of 85487

in addition to the points you raise at that link 1 - Capital gains taxes tax nominal profits which can be smaller real profits or even actual losses. If you buy a security, or land or whatever, then 10 years later with prices 40% higher, you sell it for 140% of what you bought it for, then you've made nothing (and taken a loss after expenses), but you get taxed as if you had made a 40% profit. 2 - A lot of capital gains taxes are taxes on stock profits. If you've held stock for awhile, then in many cases you've effectively paid taxes already when the company you partially own has paid taxes. 3 - A practical reason to keep capital gains taxes low (not necessarily lower than taxes on other income if they are also low) is that investment capital is very mobile, tax it to much and you drive a lot of it elsewhere.

To: i-node who wrote (50216)	8/5/2013 11:01:27 PM
From: TimF	1 Recommendation Recommended By i-node Read Replies (2) \| Respond to of 85487

Why taxing capital income is unfair Sita Slavov \| October 17, 2012, 1:47 pm Is Mitt Romney’s federal income tax rate – 14% in 2011 – too low or too high? As most of Romney’s income comes from his investments, the answer depends largely on how capital income should be taxed. Economists have made a number of arguments both in favor of and against taxing capital income. Many of these arguments rest on the impact of such a tax on investment, economic growth, and tax avoidance. In my view, however, the most compelling argument made by opponents of taxing capital income is that it’s simply unfair. Consider two individuals – call them Mr. Spender and Ms. Saver. They have the same job and the same qualifications, and they each earn $100 in wages today. They pay tax on that income – let’s say the tax rate on wages is 20%, so they’re left with $80 each after taxes. Both face the same choice: Spend the entire $80 today or put part of it in the bank and let it earn interest. Notice that there’s no inequality here. Mr. Spender and Ms. Saver have the exact same opportunities available to them. They can spend $80 today, $80 plus interest in the future, or some combination of the two. They may end up in different places if they make different choices based on their preferences. But most of us probably wouldn’t consider that the kind of inequality that policy makers should worry about. Let’s now assume that – true to their names – Mr. Spender spends his $80 today, and Ms. Saver puts her $80 in the bank. Let’s say the before-tax interest rate is 10%. If capital is not taxed at all, then Ms. Saver gets to spend $88 next year. But wait, you might say. Ms. Saver just earned $8 in income and didn’t pay any taxes. Shouldn’t she pay 20% on the $8 and get to keep only $6.40? After all, the Mr. Spenders of the world are paying 20% on their wages. But let’s step back and think about it with a longer-run perspective. Mr. Spender and Ms. Saver are identical in every respect except for the choices they made. Over his lifetime, Mr. Spender pays $20 in taxes. If we tax Ms. Saver on her interest, she ends up paying more than $20 over her lifetime – i.e., she pays $20 on her wages at the same time as Mr. Saver, plus she also pays $1.60 on her interest later. Is it fair for two people with identical opportunities to pay different amounts in taxes over their lifetimes? Fairness is subjective, and economists don’t have any special expertise in deciding what is fair. So, I can’t answer that question for anyone else. But as a citizen, I certainly think it’s unfair – and I suspect many others would agree. Could there be good reasons to tax capital income? Perhaps – but, at least in my view, fairness is not one of them. aei-ideas.org