The Rich Don't Pay Enough?!

[OohPooPahDoo]

Regardless of where the earnings of the wealthy come from (income or capital gains), it does not change the fact that they pay the majority of the taxes used to run government. The cap gains rate may be lower than high wage income rates, but it still produces massive tax revenues. Sorry, you can't wiggle your way out of this one. Hell, many countries have NO capital gains tax. We have the most progressive tax structure in the world, no matter how you cut it. Fact.

I just wanna know why passive income should be taxed less than earned income.

 

[eflatminor]

Regardless of where the earnings of the wealthy come from (income or capital gains), it does not change the fact that they pay the majority of the taxes used to run government. The cap gains rate may be lower than high wage income rates, but it still produces massive tax revenues. Sorry, you can't wiggle your way out of this one. Hell, many countries have NO capital gains tax. We have the most progressive tax structure in the world, no matter how you cut it. Fact.

I just wanna know why passive income should be taxed less than earned income.

Several reasons. First, experience suggests that a low rate of tax on capital gains increases capital investment and new business formation. This is why many countries have NO tax on capital gains.

The justification for a lower tax rate on capital gains relative to ordinary income is threefold: it is not indexed for inflation, it is a double tax, and it encourages present consumption over future consumption.

Inflation: Cap gains is not adjusted for inflation, so any appreciation of assets is taxed at the nominal instead of the real value. This means investors must pay tax not only on the real return but also on the inflation created by the Federal Reserve.

Double taxation: The capital gains tax is part of a long line of federal taxation of the same dollar of income. Wages are first taxed by payroll and personal income taxes, then again by the corporate income tax if one chooses to invest in corporate equities, and then again when those investments pay off in the form of dividends and capital gains. This puts corporations at a disadvantage relative to pass through business entities, whose owners pay personal income tax on distributed profits, instead of taxes on corporate income, capital gains, and dividends.

Consumption: A capital gains tax, like nearly all of the federal tax code, is a tax on future consumption. Future personal consumption, in the form of savings, is taxed, while present consumption is not. By favoring present over future consumption, savings are discouraged, which decreases future available capital and lowers long term growth.

 

[ilia25]

Since the CBO doesn't generate any raw data they analyze -- all of them were given by politicians.

Can you please be more specific? What data was given by which politician?

Thank you.

Since the conclusion of the report was "ZOMG we're gonna go back to the Dark Ages if we don't take money away from rich people!!!", I'd say the data was provided by Democrats in the White House.

In other words you are making baseless accusations only because you don't like the results.

At the same time Ryan has no problem citing CBO when it suits him.

 

[8537]

Regardless of where the earnings of the wealthy come from (income or capital gains), it does not change the fact that they pay the majority of the taxes used to run government. The cap gains rate may be lower than high wage income rates, but it still produces massive tax revenues. Sorry, you can't wiggle your way out of this one. Hell, many countries have NO capital gains tax. We have the most progressive tax structure in the world, no matter how you cut it. Fact.

I just wanna know why passive income should be taxed less than earned income.

Several reasons. First, experience suggests that a low rate of tax on capital gains increases capital investment and new business formation. This is why many countries have NO tax on capital gains.

A low rate of tax on labor increases human capital investment and new business formation.

Double taxation: The capital gains tax is part of a long line of federal taxation of the same dollar of income. Wages are first taxed by payroll and personal income taxes, then again by the corporate income tax if one chooses to invest in corporate equities, and then again when those investments pay off in the form of dividends and capital gains. This puts corporations at a disadvantage relative to pass through business entities, whose owners pay personal income tax on distributed profits, instead of taxes on corporate income, capital gains, and dividends.

It is not double taxation. Your wages invested in the market are not taxed. Period.

If you're going to C&P, at least have the courtesy to provide the link. For anyone interested, the above verbiage was not the poster's but directly from the conservative Tax Foundation:

http://taxfoundation.org/blog/why-capital-gains-are-taxed-lower-rate

 

[8537]

Regardless of where the earnings of the wealthy come from (income or capital gains), it does not change the fact that they pay the majority of the taxes used to run government. The cap gains rate may be lower than high wage income rates, but it still produces massive tax revenues. Sorry, you can't wiggle your way out of this one. Hell, many countries have NO capital gains tax. We have the most progressive tax structure in the world, no matter how you cut it. Fact.

I just wanna know why passive income should be taxed less than earned income.

Even worse is money managers who pay the passive rate on income generated from managing other people's money.

 

[kaz]

Big picture, we basically have 20% of American's footing the government bill for the other 80%

Really? The top 1% paid 37% of all Federal taxes, how much should they have paid?

The top 25% paid over 87% of Federal taxes. So 75% paid under 13% and that's "footing the government bill?"

You're cynical of facts, aren't you Ed?

 

[kaz]

I just wanna know why passive income should be taxed less than earned income.

Because passive tax is the second time the money is being taxed. Name passive income that wasn't already taxed as active income.

 

[daveman]

Can you please be more specific? What data was given by which politician?

Thank you.

Since the conclusion of the report was "ZOMG we're gonna go back to the Dark Ages if we don't take money away from rich people!!!", I'd say the data was provided by Democrats in the White House.

In other words you are making baseless accusations only because you don't like the results.

I've backed up my accusations. Not my problem you refuse to accept them because you don't like them.

At the same time Ryan has no problem citing CBO when it suits him.

CBO is like a computer: Garbage in, garbage out.

 

[8537]

Big picture, we basically have 20% of American's footing the government bill for the other 80%

Really? The top 1% paid 37% of all Federal taxes, how much should they have paid?
?

No they didn't. Almost as much money is collected in payroll taxes as income taxes, and payroll taxes are both intentionally regressive and applied only to labor income, not capital gains.

In other words, they are far more likely to be paid, and paid at a higher rate, by people outside that 1% you mention.

 

[8537]

I just wanna know why passive income should be taxed less than earned income.

Because passive tax is the second time the money is being taxed. Name passive income that wasn't already taxed as active income.

Carried Interest collected by fund managers.

And why should I pay a lower rate on income I earn from an investment than income I earned through labor? I presume you realize that we don't tax the investment.

 

[eflatminor]

And why should I pay a lower rate on income I earn from an investment than income I earned through labor?

Excellent, you agree we should lower income tax rates. You're beginning to come around...

 

[eflatminor]

I just wanna know why passive income should be taxed less than earned income.

Several reasons. First, experience suggests that a low rate of tax on capital gains increases capital investment and new business formation. This is why many countries have NO tax on capital gains.

A low rate of tax on labor increases human capital investment and new business formation.

True as well...so let's lower the income tax rates.

Double taxation: The capital gains tax is part of a long line of federal taxation of the same dollar of income. Wages are first taxed by payroll and personal income taxes, then again by the corporate income tax if one chooses to invest in corporate equities, and then again when those investments pay off in the form of dividends and capital gains. This puts corporations at a disadvantage relative to pass through business entities, whose owners pay personal income tax on distributed profits, instead of taxes on corporate income, capital gains, and dividends.

It is not double taxation. Your wages invested in the market are not taxed. Period.

Well, since you said "period", that must make it so.

If you're going to C&P, at least have the courtesy to provide the link. For anyone interested, the above verbiage was not the poster's but directly from the conservative Tax Foundation:

Why Capital Gains are taxed at a Lower Rate | Tax Foundation

I've posted the link many times before. Still waiting for you to provide any credible evidence that capital gains is not double taxation.

 

[eflatminor]

CBO is like a computer: Garbage in, garbage out.

Yep.

 

[kaz]

Big picture, we basically have 20% of American's footing the government bill for the other 80%

Really? The top 1% paid 37% of all Federal taxes, how much should they have paid?
?

No they didn't. Almost as much money is collected in payroll taxes as income taxes, and payroll taxes are both intentionally regressive and applied only to labor income, not capital gains.

In other words, they are far more likely to be paid, and paid at a higher rate, by people outside that 1% you mention.

So workers paying for their own retirement is a "regressive" tax?

And I like your dearth of data. You didn't provide it because it hardly changes the data.

 

[8537]

And why should I pay a lower rate on income I earn from an investment than income I earned through labor?

Excellent, you agree we should lower income tax rates. You're beginning to come around...

We should have tax rates commensurate with spending over the life of a business cycle.

 

[8537]

Well, since you said "period", that must make it so.

I've already given you the dual explanations. Instead of attempting to refute those, you simply fall back to "I can find a link that says differently!"

I've posted the link many times before. Still waiting for you to provide any credible evidence that capital gains is not double taxation.

Here's evidence for scenario number one:

You earn $100 in labor income. You pay $20 in taxes. Of the remaining $80, you invest $10 in a pin factory.

Five years later, that pin factory is booming and your investment is now worth $25. Fearing a crash, you realize those gains....

And when you do so, you pay a tax - on the gain of $15. Not on the initial investment. The initial investment is not taxed. You pay a tax on the realized new income.

Now you can scream "I want a link to a "serious" economist", but the above is a fact.

 

[eflatminor]

Well, since you said "period", that must make it so.

I've already given you the dual explanations. Instead of attempting to refute those, you simply fall back to "I can find a link that says differently!"

I've posted the link many times before. Still waiting for you to provide any credible evidence that capital gains is not double taxation.

Here's evidence for scenario number one:

You earn $100 in labor income. You pay $20 in taxes. Of the remaining $80, you invest $10 in a pin factory.

Five years later, that pin factory is booming and your investment is now worth $25. Fearing a crash, you realize those gains....

And when you do so, you pay a tax - on the gain of $15. Not on the initial investment. The initial investment is not taxed. You pay a tax on the realized new income.

Now you can scream "I want a link to a "serious" economist", but the above is a fact.

We've heard your simpleton explanation before. As you stated, let's hear a serious economist back you up.

 

[8537]

Really? The top 1% paid 37% of all Federal taxes, how much should they have paid?
?

No they didn't. Almost as much money is collected in payroll taxes as income taxes, and payroll taxes are both intentionally regressive and applied only to labor income, not capital gains.

In other words, they are far more likely to be paid, and paid at a higher rate, by people outside that 1% you mention.

So workers paying for their own retirement is a "regressive" tax?

And I like your dearth of data. You didn't provide it because it hardly changes the data.

Paying for their own retirement? Lemme guess: you believe there's a lockbox? FICA doesn't fund your future retirement.

Here's the data: Personal income taxes amount to about 1,116B in revenue in 2011. FICA taxes amount to about 840B. (for comparison, corporate income taxes amount to about 240B during a period of record profits)

 

[8537]

Well, since you said "period", that must make it so.

I've already given you the dual explanations. Instead of attempting to refute those, you simply fall back to "I can find a link that says differently!"

I've posted the link many times before. Still waiting for you to provide any credible evidence that capital gains is not double taxation.

Here's evidence for scenario number one:

You earn $100 in labor income. You pay $20 in taxes. Of the remaining $80, you invest $10 in a pin factory.

Five years later, that pin factory is booming and your investment is now worth $25. Fearing a crash, you realize those gains....

And when you do so, you pay a tax - on the gain of $15. Not on the initial investment. The initial investment is not taxed. You pay a tax on the realized new income.

Now you can scream "I want a link to a "serious" economist", but the above is a fact.

We've heard your simpleton explanation before. As you stated, let's hear a serious economist back you up.

Can you refute the explanation? Find fault with anything that's been presented? You sure fall for an appeal to authority easily.

 

[Katzndogz]

It's never been about how much the rich pay. The rich pay enough, but after they have paid, they still keep more than socialists think they are entitled to keep.