A question about tax rates

[iamwhatiseem]

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.

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.

Um...what?
Who said I faulted individuals for anything? I simply am making the point that over half the population getting more back then they pay in is a much, MUCH larger concern than comparing real income tax rate to investment taxes.
Sorta like complaining about a pot hole in the road when there is a bridge completely out 20 feet ahead of it.

 

[editec]

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%.

Tax systems can be devised sagely to change the way we conduct affairs of society.

Or...

Tax systems can be idevised unwisely to change the way we conduct affiars of society.

If a society, as one example, found itself consuming everything, and lacking in investment capital it would make sense to lower taxation on investments.

If, for another example, a society found itself with far more investment capital than it could efficiently use, then it might make sense in that case to RAISE the taxation on capital gains from investments.

There is no single right path to a healthy macro-economy.

What is a wise policy in one circumstance is unwise in another circumstance.

What astounds me, here, is how many of you people think that there are ironclad RULES that one can follow that will inevitably lead to a healthy economy.

I fail to see how one can be so stupid as to imagine that, but the evidence of such stupidity is found all over this board and other like it all over the net.

 

[Kiki Cannoli]

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%.

Tax systems can be devised sagely to change the way we conduct affairs of society.

Or...

Tax systems can be idevised unwisely to change the way we conduct affiars of society.

If a society, as one example, found itself consuming everything, and lacking in investment capital it would make sense to lower taxation on investments.

If, for another example, a society found itself with far more investment capital than it could efficiently use, then it might make sense in that case to RAISE the taxation on capital gains from investments.

There is no single right path to a healthy macro-economy.

What is a wise policy in one circumstance is unwise in another circumstance.

What astounds me, here, is how many of you people think that there are ironclad RULES that one can follow that will inevitably lead to a healthy economy.

I fail to see how one can be so stupid as to imagine that, but the evidence of such stupidity is found all over this board and other like it all over the net.

This is probably the truest statement made on this thread.

 

[Ravi]

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%.

Tax systems can be devised sagely to change the way we conduct affairs of society.

Or...

Tax systems can be idevised unwisely to change the way we conduct affiars of society.

If a society, as one example, found itself consuming everything, and lacking in investment capital it would make sense to lower taxation on investments.

If, for another example, a society found itself with far more investment capital than it could efficiently use, then it might make sense in that case to RAISE the taxation on capital gains from investments.

There is no single right path to a healthy macro-economy.

What is a wise policy in one circumstance is unwise in another circumstance.

What astounds me, here, is how many of you people think that there are ironclad RULES that one can follow that will inevitably lead to a healthy economy.

I fail to see how one can be so stupid as to imagine that, but the evidence of such stupidity is found all over this board and other like it all over the net.

Good post, and very true overall.

I'm still not seeing why it is a good idea to tax labor higher than investment though.

 

[DiamondDave]

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%.

Tax systems can be devised sagely to change the way we conduct affairs of society.

Or...

Tax systems can be idevised unwisely to change the way we conduct affiars of society.

If a society, as one example, found itself consuming everything, and lacking in investment capital it would make sense to lower taxation on investments.

If, for another example, a society found itself with far more investment capital than it could efficiently use, then it might make sense in that case to RAISE the taxation on capital gains from investments.

There is no single right path to a healthy macro-economy.

What is a wise policy in one circumstance is unwise in another circumstance.

What astounds me, here, is how many of you people think that there are ironclad RULES that one can follow that will inevitably lead to a healthy economy.

I fail to see how one can be so stupid as to imagine that, but the evidence of such stupidity is found all over this board and other like it all over the net.

Good post, and very true overall.

I'm still not seeing why it is a good idea to tax labor higher than investment though.

I argue with you often... but I see the merit in your stance here... and I can agree... that whether your 'income' is thru investment or thru labor should be no different... and I don't see it as double taxation especially when if you lose money in your investment, it can be deducted from 'income'....

However... what I do consider double taxation is the estate or death tax... and I see it as incredibly unfair again, because like income taxes, it is done differently depending on the amount... IMHO you should be allowed, tax free, to ensure it stays within your immediate family or to a legit charity.... if you're leaving it to a neighbor or a friend, IMHO much different story

I have stated this before... all income, regardless of amount or where it came from, should be taxed the same rate on every dollar earned by every citizen... dollar 1 being the same as dollar 6000000... no exceptions, no loopholes.... truly equal treatment under government and law... not some disguised 'leveled equal' treatment that graduates up, which is noting more than pandering to votes on the subjective argument of 'fairness'

 

[Ravi]

Tax systems can be devised sagely to change the way we conduct affairs of society.

Or...

Tax systems can be idevised unwisely to change the way we conduct affiars of society.

If a society, as one example, found itself consuming everything, and lacking in investment capital it would make sense to lower taxation on investments.

If, for another example, a society found itself with far more investment capital than it could efficiently use, then it might make sense in that case to RAISE the taxation on capital gains from investments.

There is no single right path to a healthy macro-economy.

What is a wise policy in one circumstance is unwise in another circumstance.

What astounds me, here, is how many of you people think that there are ironclad RULES that one can follow that will inevitably lead to a healthy economy.

I fail to see how one can be so stupid as to imagine that, but the evidence of such stupidity is found all over this board and other like it all over the net.

Good post, and very true overall.

I'm still not seeing why it is a good idea to tax labor higher than investment though.

I argue with you often... but I see the merit in your stance here... and I can agree... that whether your 'income' is thru investment or thru labor should be no different... and I don't see it as double taxation especially when if you lose money in your investment, it can be deducted from 'income'....

However... what I do consider double taxation is the estate or death tax... and I see it as incredibly unfair again, because like income taxes, it is done differently depending on the amount... IMHO you should be allowed, tax free, to ensure it stays within your immediate family or to a legit charity.... if you're leaving it to a neighbor or a friend, IMHO much different story

I have stated this before... all income, regardless of amount or where it came from, should be taxed the same rate on every dollar earned by every citizen... dollar 1 being the same as dollar 6000000... no exceptions, no loopholes.... truly equal treatment under government and law... not some disguised 'leveled equal' treatment that graduates up, which is noting more than pandering to votes on the subjective argument of 'fairness'

Other than your stance on the inheritance tax, I agree with this....it would be fair and save a boatload of resentment from either side. Now, if only we could get the pols to agree.

 

[DiamondDave]

Good post, and very true overall.

I'm still not seeing why it is a good idea to tax labor higher than investment though.

I argue with you often... but I see the merit in your stance here... and I can agree... that whether your 'income' is thru investment or thru labor should be no different... and I don't see it as double taxation especially when if you lose money in your investment, it can be deducted from 'income'....

However... what I do consider double taxation is the estate or death tax... and I see it as incredibly unfair again, because like income taxes, it is done differently depending on the amount... IMHO you should be allowed, tax free, to ensure it stays within your immediate family or to a legit charity.... if you're leaving it to a neighbor or a friend, IMHO much different story

I have stated this before... all income, regardless of amount or where it came from, should be taxed the same rate on every dollar earned by every citizen... dollar 1 being the same as dollar 6000000... no exceptions, no loopholes.... truly equal treatment under government and law... not some disguised 'leveled equal' treatment that graduates up, which is noting more than pandering to votes on the subjective argument of 'fairness'

Other than your stance on the inheritance tax, I agree with this....it would be fair and save a boatload of resentment from either side. Now, if only we could get the pols to agree.

Why would you want to double tax something that stays in a family?? Do you wish to tax money that goes to your children or spouse otherwise too?? Can't buy them a car without paying tax?? Can't give them $$ for living or college unless it is deemed as income by them??

IMHO, death or inheritance tax is just another envy money grab on earnings and savings that have already been taxed

 

[Ravi]

I argue with you often... but I see the merit in your stance here... and I can agree... that whether your 'income' is thru investment or thru labor should be no different... and I don't see it as double taxation especially when if you lose money in your investment, it can be deducted from 'income'....

However... what I do consider double taxation is the estate or death tax... and I see it as incredibly unfair again, because like income taxes, it is done differently depending on the amount... IMHO you should be allowed, tax free, to ensure it stays within your immediate family or to a legit charity.... if you're leaving it to a neighbor or a friend, IMHO much different story

I have stated this before... all income, regardless of amount or where it came from, should be taxed the same rate on every dollar earned by every citizen... dollar 1 being the same as dollar 6000000... no exceptions, no loopholes.... truly equal treatment under government and law... not some disguised 'leveled equal' treatment that graduates up, which is noting more than pandering to votes on the subjective argument of 'fairness'

Other than your stance on the inheritance tax, I agree with this....it would be fair and save a boatload of resentment from either side. Now, if only we could get the pols to agree.

Why would you want to double tax something that stays in a family?? Do you wish to tax money that goes to your children or spouse otherwise too?? Can't buy them a car without paying tax?? Can't give them $$ for living or college unless it is deemed as income by them??

IMHO, death or inheritance tax is just another envy money grab on earnings and savings that have already been taxed

You tax someone's profit. No matter where they got the money.

 

[Soggy in NOLA]

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%.

I'm totally opposed to a direct tax on labor, PERIOD.

 

[DiamondDave]

Other than your stance on the inheritance tax, I agree with this....it would be fair and save a boatload of resentment from either side. Now, if only we could get the pols to agree.

Why would you want to double tax something that stays in a family?? Do you wish to tax money that goes to your children or spouse otherwise too?? Can't buy them a car without paying tax?? Can't give them $$ for living or college unless it is deemed as income by them??

IMHO, death or inheritance tax is just another envy money grab on earnings and savings that have already been taxed

You tax someone's profit. No matter where they got the money.

Your kids paying tax on allowance?? Your spouse when you buy them something??

Keeping things within the family is not 'profit'

 

[Intense]

Why would you want to double tax something that stays in a family?? Do you wish to tax money that goes to your children or spouse otherwise too?? Can't buy them a car without paying tax?? Can't give them $$ for living or college unless it is deemed as income by them??

IMHO, death or inheritance tax is just another envy money grab on earnings and savings that have already been taxed

You tax someone's profit. No matter where they got the money.

Your kids paying tax on allowance?? Your spouse when you buy them something??

Keeping things within the family is not 'profit'

The concept on the Inheritance Tax is a slap in the face to the concept of Private Property. It seems more about breaking up wealth for redistribution than establishing and serving the Society's needs. It causes Break up Established Wealth, eliminating competition, steering to greater dependency on Government. The concept is Predatory.

Government acting out in it's own way on the Oedipus Complex. It does not want anything to get between You and it. Not God, not Mom, not Dad. It want's to Kill Dad, Screw Mom, and take Your Inheritance.

 

[Ravi]

Why would you want to double tax something that stays in a family?? Do you wish to tax money that goes to your children or spouse otherwise too?? Can't buy them a car without paying tax?? Can't give them $$ for living or college unless it is deemed as income by them??

IMHO, death or inheritance tax is just another envy money grab on earnings and savings that have already been taxed

You tax someone's profit. No matter where they got the money.

Your kids paying tax on allowance?? Your spouse when you buy them something??

Keeping things within the family is not 'profit'

My bad. I thought you were being serious for once in your life.

 

[kiwiman127]

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?

The unemployment numbers don't reflect the actual amount of workers that are actually not working. In other words, the unemployed counted for the unemployment rate doesn't reflect the unemployed that have fallen of their charts requirements methodology. Such as those who haven't looked for a job in the last four weeks. They are called "marginally attached" to the labor force, but are no longer officially part of the unemployment rate or the labor force and are called discouraged workers.
That is why, the Worker Participation is the more accurate barometer. It takes in account all unemployed workers.
Now compare the unemployment rate to the participation rate from 2001-2011.
Unemployment a/o Jan in each year by Unemployment Rate
2001-4.2
2002-5.7
2003-5.8
2004-5.7
2005-5.3
2006-4.7
2007-4.6
2008-5.0
2009-7.8
2010-9.7
2011-9.0

Now compare those numbers to the Participation Rate, notice how in 2001 we had 4.2% unemployment and look the Participation Rate, in 2007 we had a 4.6 unemployment rate now compare the Participation Rate of 2007 with the one in 2001. There's a huge discrepancy.
The conclusion: The reduction in the Capital Gains Tax did not create the jobs they were advertized to do, after they were droppped in 2003! Well at least in the US!

 

[MiddleClass]

The 15% capital gains tax rate is a gift from the wealthy in the Wall Street Lobby. The wealthy care not about tax fairness, but only about their greedy bank accounts. The Wealthy these days are among the most UnAmerican.

 

[editec]

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%.

Tax systems can be devised sagely to change the way we conduct affairs of society.

Or...

Tax systems can be idevised unwisely to change the way we conduct affiars of society.

If a society, as one example, found itself consuming everything, and lacking in investment capital it would make sense to lower taxation on investments.

If, for another example, a society found itself with far more investment capital than it could efficiently use, then it might make sense in that case to RAISE the taxation on capital gains from investments.

There is no single right path to a healthy macro-economy.

What is a wise policy in one circumstance is unwise in another circumstance.

What astounds me, here, is how many of you people think that there are ironclad RULES that one can follow that will inevitably lead to a healthy economy.

I fail to see how one can be so stupid as to imagine that, but the evidence of such stupidity is found all over this board and other like it all over the net.

Good post, and very true overall.

I'm still not seeing why it is a good idea to tax labor higher than investment though.

It might NOT be.

It really depends on what the economy needs to maintain a balance between supply and demand.

In my opinion, the root cause of the investment bubbles we've been experiencing for the last thirty years, and the root cause of the various BANSTER'S MELTDOWNS we had (there's been three, including this latest and worst one) stem from the fact that the investment class has too damned much money to invest.

As a consequence we have too much investment capital chasing too few profits.

And as a consequence of that, investors are likely to invest in much riskier investments thus causing BUBBLES in the markets.

Everyone seems to understand what inflation is when its the workers who have too much money.

But I never see anybody talking about the INFLATION that comes to the markets when the investors have too much money.

Of course what inevitably happens to Bubbles is that they burst once the animal spirits that were driving these high risk investments fades.

But as we can see all too clearly, right now, when those bubbles burst it isn't JUST the investor classes who suffer the consequences.

I don't really know what the right number is for imposing taxes on capital gains.

But what I DO know is that it won't ALWAYS be the same right number.

That is the nature of macro-economics.

Things change so the economy ought to be able to accomodate those changing conditions.

In THEORY, that is what a national bank ought to be doing.

But we do not have a national bank.

We have a semi-Federal (reserve) bank that is owned by the private sector, and their agenda isn't based on nationalist sentiments, it is based on what works best for the BANKSTERS.

Invidently, 90% of the banks in the USA are NOT of the BANKSTER CLASS.

They are VICTIMS of the FEDERAL RESERVE MAFIA no less than the rest of us.

 

[Ravi]

That's a very interesting point about investors having too much money to invest....and exactly what happened with the mortgages, they got cut up into tiny little pieces and just kept getting resold as everyone tried to make a killing.

Well, the killing they might have made seems to be killing us all.

 

[DiamondDave]

You tax someone's profit. No matter where they got the money.

Your kids paying tax on allowance?? Your spouse when you buy them something??

Keeping things within the family is not 'profit'

My bad. I thought you were being serious for once in your life.

My bad... I thought you were thinking of equal treatment and not something of unequal treatment...

So I guess since you support the inheritance tax, you will then support any giving between family members to be taxed... I mean, it's not your kids earning, it is yours then, and when you give it is earning again... give your spouse a bonus of a 30K car, you best pay taxes on that beyond the sales tax you paid to purchase it...

Again... you just want the punishment and redistribution

 

[kiwiman127]

Anyone, with an open mind, who looked at the alarming rate of the growing gap between the working class's and the top percentile's share of the National Income would realize there has already been a redistribution of wealth and it's been flowing up wards. Most of this has to due with over thirty years of flat wages. Who determines wages? Who is relocating offshore because they can operate paying Third World wages? Who invests in these companies who are off-shoring these jobs? Whatever happened to the job creators creating jobs in the US, despite the lowest taxes on Capital Gains since at least 1950?

 

[Toro]

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%.

because the income that was invested has already been taxed once.

A lot of corporations don't pay tax. What about that?

 

[Toro]

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%.

Actually not quite true.. Cap Gains have both short and long term rates. And I believe they are already indexed somewhat to income (or WERE before the Bush cuts).

The reason for this is when you make an investment, you've PAID taxes on that money already. Not fair to tax proceeds from that principle at the same rate as some totally NEW income like salary..

It's to ENCOURAGE RISK.. Something that's a totally foreign concept to lefties..

It's not to encourage risk. Encouraging risk isn't necessarily a good thing. (See: Financial Crisis 2008- )

It is to avoid taxing savings. Savings is the capital stock and thus productive capacity of the nation.