A question about tax rates

Why is income taxed differently and why is this not seen as an unfair situation?

For instance, if you earn a pay check or are self employed you are taxed somewhere between 10% and 35%.

Yet if you earn your income through investments you are taxed a flat 15%.

:eusa_eh:



The government logic is that it's the difference between income and at risk capital.

Income is owed as earned. Capital can be completely lost, which happens more than you realize.

The lower tax rate on Cap Gains is due to the long term nature of investments and their importance to economic growth (which enables income producing jobs).


IMO, income taxes should be low and the same flat rate for everyone, and capital gains should not be taxed. The income which produced the capital has already been taxed once. And given the way the government continues to destroy the value of the dollar, taxing gains which are often just barely keeping up with inflation (if that) is adding insult to injury.


"The lower tax rate on Cap Gains is due to the long term nature of investments and their importance to economic growth (which enables income producing jobs)."

Recent Capital Gains Tax Rates
1991-92- 28.9%
1993-96- 29.2% "
1997-2000- 21.2% "
2001- 21.2% "
2002- 21.2%
2003-05- 16.1%
2006-07- 15.7%
2008-09- 15.4% "
2010-12- 15%

So, as the Capital Gain Tax decreased, more employment followed? Well not quite. Below is the Employment Participation Chart based on the Department of Labor Statistics. Match the Capital Gains Effective Tax Rate with the percentage of people employed. When the Capital Gains Tax Rate dropped as part of the Bush tax cut, the participation rate never had the bounce one would expect. Thus historically, lowering the Capital Gains Tax had very little effect regarding the job creators creating jobs,,well in the US anyway.
 
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Because the rate of return would diminish if taxes increased, thus the incentive to invest/risk also diminishes.

It didn't when the tax rate was higher. Another thing that is supposed to happen but in all history never has.

Now don't talk about something happening if capital gains were taxed at 50%. That's not gonna happen either.
 
Because the rate of return would diminish if taxes increased, thus the incentive to invest/risk also diminishes.

It didn't when the tax rate was higher. Another thing that is supposed to happen but in all history never has.

Now don't talk about something happening if capital gains were taxed at 50%. That's not gonna happen either.

It sure did happen in my household portfolio.
 
Why is income taxed differently and why is this not seen as an unfair situation?

For instance, if you earn a pay check or are self employed you are taxed somewhere between 10% and 35%.

Yet if you earn your income through investments you are taxed a flat 15%.

:eusa_eh:

Rav really?

This was discussed pretty extensively in that other thread in Economy, which you participated in.

No offense, but it seems like the obvious explanation here is that you simply didn't like any of the answers given to you in that thread so you're trying again somewhere else hoping someone will tell you what you want to hear.
 
Why is income taxed differently and why is this not seen as an unfair situation?

For instance, if you earn a pay check or are self employed you are taxed somewhere between 10% and 35%.

Yet if you earn your income through investments you are taxed a flat 15%.

:eusa_eh:

Rav really?

This was discussed pretty extensively in that other thread in Economy, which you participated in.

No offense, but it seems like the obvious explanation here is that you simply didn't like any of the answers given to you in that thread so you're trying again somewhere else hoping someone will tell you what you want to hear.

i didn't see that one so if you could please explain it here.

so far all i've heard about is mallarky incentive to invest, double taxing, etc. and none of those work for me.

after all, if i put forth my assets in order to make a living why should it matter if my assets are capital or labor?
 
Ok....Your initial question was fair and seemed to be intended to gather information.
This question above is asked to elicit an argument. Not going there.
The answers you received are satisfactory and sufficient to satisfy your query.
Now you are trying to start a fight. Forget it. Not playing this game.
BTW, income is taxed more than once....It's taxed when it's earned. Taxed when it's spent. Taxed when it is saved.
If one takes a dollar and spends it on certain items the effective tax can near 70%....
Let's take a cell phone owning internet using pay tv customer...
I will use my own...
Ok., My cell phone bill which includes three phones on my account.
The bill is about $180 per month....There are about $15 in taxes on that or7%.
My pay tv bill is taxed by 5% in NC and 2% to federal.
State income tax 5%. Sales tax 8%....federal gas tax 18 cents per gallon or at $3.50 per gallon or 5%..State gas tax is 32.5 cents per gallon or about 9%...
So lets add those up.....
Federal income tax 28%+7%+5%+2%+5%+9%.....56%..My income is basically taxed at 56%!!!! And I am not paying my fair share?!!!!! Please....

Don't forget your vehicle taxes (property and registration).
Don't forget the taxes on your electricity and/or natural gas.
Got a fishing or hunting license? Yep, that's a tax also.
Smoke a cigarette or have an alcoholic beverage now and then. There is another tax.
Do you live in a domicile of some sort? If you are the owner, you pay property taxes directly, as a renter they are indirect as part of your rent.
Fly on a commercial airliner? Yep, there is a tax on that also.
Stay in a hotel somewhere? That has a special tax also.

If most people that make between $40k and $55k (average household income <not personal income, household income> is about $48k) were to run the numbers, they would probably discover that they actually pay about 50% in combined taxes.
 
The top question that should be prevalent on everyone's mind:
Why is over half of all income in America not only not taxed at all - but these people have a negative tax liability - receiving money from the IRS.

False premise means no one will answer your question.

Is that so?
Then dispute my claim.
Half of Americans pay no federal income tax - Business - Personal finance - Tax Tactics - msnbc.com
51% of Americans Pay No Federal Income Taxes - Derek Thompson - Business - The Atlantic
Why do half of Americans pay no federal income tax? - CSMonitor.com
Nearly half of US households escape fed income tax - Yahoo! Finance


Idiot

Simple. You claimed the entire 50% of them also received money back such that they have a negative tax liability. That's not true, and your links don't prove it.
 
no individual taxes are paid on money that has already been taxed....the money that is being taxed is money that has never been taxed, the gain on investment.

there is no individual double taxation?

No, Only Risk. Do you want to encourage investment which translates to growth, or deter it?
 
Why is income taxed differently and why is this not seen as an unfair situation?

For instance, if you earn a pay check or are self employed you are taxed somewhere between 10% and 35%.

Yet if you earn your income through investments you are taxed a flat 15%.

:eusa_eh:



No shit. Everyone should pay the same.... i don't care of your income is $1 or 1 billion.....
 
Why is income taxed differently and why is this not seen as an unfair situation?

For instance, if you earn a pay check or are self employed you are taxed somewhere between 10% and 35%.

Yet if you earn your income through investments you are taxed a flat 15%.

:eusa_eh:



No shit. Everyone should pay the same.... i don't care of your income is $1 or 1 billion.....

There are allot of ways to divide the pie, from one angle something seems fair, from another, it turns out imbalanced. Measure twice, cut once. We need to restructure the Tax Code, more importantly, we need to do it in a more honorable way as opposed to a less honorable way. Even Savings Interest is below the rate of inflation. Who does that serve? Investing? The Higher the Risk, the Higher the Return? Is that prudent? Who's setting the Values? To what end? Who profits every time money changes hands? Who's spooking Investment? To what end?
From as far back as Hamilton, Schemers, like Him, were good at getting people to trust and invest, only to get scared to selling for pennies on the dollar, through manipulation. The Sharks always seem to know where and when to cash in.

How much of your hard earned money do you want your income Tax doubled on because you chose to invest it? True you are paying Interest on the profit earned, not the capital, but what guarantee is there that there will be any return at all on the investment, or that you don't lose it?

Government Controlled Banks do a great job of racking up Interest, Fee's, Penalties, hidden Charges on Plastic, with Government consent. That doesn't seem to be a problem for the Fed. Seems pretty lucrative on both ends there, and their joy is compounded by the misery of anyone caught in their snare. Why is that?

Seems that the harder you hit Capital Investment, the less there will be of it. That doesn't exactly create jobs.
 
because the income that was invested has already been taxed once.
So? Why do you people keep babbling about that? Of course it's already been taxed once and it won't be taxed again. Only the profits will be taxed.

Now, moving along, where is the fairness in charging on tax rate for one type of income vs. another tax rate for another type of income?



If you invest $100 and make a 10% return in 5 years, but the inflation has been over 10% over that same period, why should the government tax your "phantom" profits which haven't even kept up with inflation?

u can write off loses.
 
So? Why do you people keep babbling about that? Of course it's already been taxed once and it won't be taxed again. Only the profits will be taxed.

Now, moving along, where is the fairness in charging on tax rate for one type of income vs. another tax rate for another type of income?



If you invest $100 and make a 10% return in 5 years, but the inflation has been over 10% over that same period, why should the government tax your "phantom" profits which haven't even kept up with inflation?

u can write off loses.

That's damage control, not profit. Why invest with no incentive?
 
Why is income taxed differently and why is this not seen as an unfair situation?

For instance, if you earn a pay check or are self employed you are taxed somewhere between 10% and 35%.

Yet if you earn your income through investments you are taxed a flat 15%.

:eusa_eh:



The government logic is that it's the difference between income and at risk capital.

Income is owed as earned. Capital can be completely lost, which happens more than you realize.

The lower tax rate on Cap Gains is due to the long term nature of investments and their importance to economic growth (which enables income producing jobs).


IMO, income taxes should be low and the same flat rate for everyone, and capital gains should not be taxed. The income which produced the capital has already been taxed once. And given the way the government continues to destroy the value of the dollar, taxing gains which are often just barely keeping up with inflation (if that) is adding insult to injury.


"The lower tax rate on Cap Gains is due to the long term nature of investments and their importance to economic growth (which enables income producing jobs)."

Recent Capital Gains Tax Rates
1991-92- 28.9%
1993-96- 29.2% "
1997-2000- 21.2% "
2001- 21.2% "
2002- 21.2%
2003-05- 16.1%
2006-07- 15.7%
2008-09- 15.4% "
2010-12- 15%

So, as the Capital Gain Tax decreased, more employment followed? Well not quite. Below is the Employment Participation Chart based on the Department of Labor Statistics. Match the Capital Gains Effective Tax Rate with the percentage of people employed. When the Capital Gains Tax Rate dropped as part of the Bush tax cut, the participation rate never had the bounce one would expect. Thus historically, lowering the Capital Gains Tax had very little effect regarding the job creators creating jobs,,well in the US anyway.
Umm until the 2008 recession unemployment was around 5%....
Much of the money that remained in the hands of investors was reinvested.
IS it your assertion that HIGHER Taxes are needed to increase employment? I fail to see the connection. Your premise presupposes that government is the only producer of jobs.
So why not tax everyone at 100% then? If government is so adept at job creation, why not have government control ALL wealth?
 
So? Why do you people keep babbling about that? Of course it's already been taxed once and it won't be taxed again. Only the profits will be taxed.

Now, moving along, where is the fairness in charging on tax rate for one type of income vs. another tax rate for another type of income?



If you invest $100 and make a 10% return in 5 years, but the inflation has been over 10% over that same period, why should the government tax your "phantom" profits which haven't even kept up with inflation?

u can write off loses.
That is not a loss. And as such is not deductible.
A loss would be if a business made one dollar in gross revenue but had $1.20 in expenses. That's a net loss of 20%.
Inflation is not the problem of the government. They will still want their taxes.
Christ!!!
 

From the yahoo article it states that they (the taxpayor) qualified for enough exemptions and deductions to eliminate liability. So they are wrong because they did it right?

N - it is wrong that half of all wage earners have zero or even negative tax liability for ANY reason. In a country that is bankrupt, we cannot afford to have the IRS pay half of the working population money rather than the other way around.
Period.
 

N - it is wrong that half of all wage earners have zero or even negative tax liability for ANY reason. In a country that is bankrupt, we cannot afford to have the IRS pay half of the working population money rather than the other way around.
Period.

If what you are saying is that the USA needs a total tax reform, I agree. However faulting individuals for properly filling out the forms is not the solution.
 
Why is income taxed differently and why is this not seen as an unfair situation?

For instance, if you earn a pay check or are self employed you are taxed somewhere between 10% and 35%.

Yet if you earn your income through investments you are taxed a flat 15%.

:eusa_eh:
Easy..Investment capital was already taxed when it was earned. That is whether through employment, inheritance, gambling winnings, stock dividends, etc.
The lower rate on capital gains is an incentive for people to invest rather than simply sit on their money. It's an incentive to put wealth back into the economy.
Investment in business creates jobs which in turn give workers the opportunity to spend and invest themselves.
Increase taxes and that all goes away. When the earnings and income of business owners and workers stop spending and investing because part of their income normally used for these things is taken away by government. Even the perception that taxes will be increased causes people to hunker down and slam shut their wallets.
Even in those cases, it is taxed at different rates.

As for your "its already been taxed" argument, that is an invalid point. That income will not be taxed again. Only any profit on it.
 
Why is income taxed differently and why is this not seen as an unfair situation?

For instance, if you earn a pay check or are self employed you are taxed somewhere between 10% and 35%.

Yet if you earn your income through investments you are taxed a flat 15%.

:eusa_eh:



The government logic is that it's the difference between income and at risk capital.

Income is owed as earned. Capital can be completely lost, which happens more than you realize.

The lower tax rate on Cap Gains is due to the long term nature of investments and their importance to economic growth (which enables income producing jobs).


IMO, income taxes should be low and the same flat rate for everyone, and capital gains should not be taxed. The income which produced the capital has already been taxed once. And given the way the government continues to destroy the value of the dollar, taxing gains which are often just barely keeping up with inflation (if that) is adding insult to injury.


"The lower tax rate on Cap Gains is due to the long term nature of investments and their importance to economic growth (which enables income producing jobs)."

Recent Capital Gains Tax Rates
1991-92- 28.9%
1993-96- 29.2% "
1997-2000- 21.2% "
2001- 21.2% "
2002- 21.2%
2003-05- 16.1%
2006-07- 15.7%
2008-09- 15.4% "
2010-12- 15%

So, as the Capital Gain Tax decreased, more employment followed? Well not quite. Below is the Employment Participation Chart based on the Department of Labor Statistics. Match the Capital Gains Effective Tax Rate with the percentage of people employed. When the Capital Gains Tax Rate dropped as part of the Bush tax cut, the participation rate never had the bounce one would expect. Thus historically, lowering the Capital Gains Tax had very little effect regarding the job creators creating jobs,,well in the US anyway.

It almost seems as if lowering the capital gains tax caused people to be incautious with their money. :eusa_eh:
 
Why is income taxed differently and why is this not seen as an unfair situation?

For instance, if you earn a pay check or are self employed you are taxed somewhere between 10% and 35%.

Yet if you earn your income through investments you are taxed a flat 15%.

:eusa_eh:

Rav really?

This was discussed pretty extensively in that other thread in Economy, which you participated in.

No offense, but it seems like the obvious explanation here is that you simply didn't like any of the answers given to you in that thread so you're trying again somewhere else hoping someone will tell you what you want to hear.
I don't recall that particular point being answered.
 

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