Mitt Romney pays a lower tax rate than you do.

[Valerie]

The article is silly.

It seems to be saying that Mitt gets to pay a lower tax rate because salaries are an expense while profits are not. Mitt pays less because the business has to pay tax on profit. Well, so does the employee. The employee's salary IS a profit on the employee's labor.

The point was to illustrate that ordinary income is taxed only once, at the personal level, while capital gains are taxed twice, both at the personal level and at the corporate level, thus justifying the differing tax rates for different types of income...

Ordinary income is taxed only once, at the personal level; capital gains are taxed twice, both at the personal level and at the corporate level.


Consider an individual, who owns a share of stock of a particular company. We’ll call this person Joe. This means that Joe owns a part of that company. In effect, he owns a share of the profit of the company. Let’s also say that this company has an employee. We’ll call him Bob. He represents the working class.

After all expenses but tax, the company has earned some amount of money. Let’s say that Joe’s share of the pretax earnings is $1 (based on the fact that he owns one share of stock).

There are two scenarios. First, the company could use the dollar to pay Bob additional compensation, the way that most working-class Americans derive their income. Alternatively, Joe could receive the money as a dividend distribution.


Let’s look at how taxes play out under each scenario.

If Bob receives the $1 as compensation, the company won’t have to pay taxes on the dollar. Paying employees is a pre-tax expense for businesses. However, Bob will have to pay ordinary income taxes on this money. Let’s say that his marginal tax rate is 35 percent (that’s probably a high estimate, but we’ll err on the side of conservatism). That means that Bob will pay $0.35 in income tax and he will get to keep $0.65.

Now, let’s consider the scenario where the company decided to pay a dividend with this pre-tax dollar. In this case, the company would have to pay taxes on the dollar. Let’s say that the company’s marginal tax rate is 35 percent. The company will pay $0.35 in corporate taxes and Joe will receive $0.65 in dividends. However, Joe will still have to pay a 15 percent tax on the dividend. Therefore, he will have to pay almost $0.10 of additional tax and will be left with only about $0.55.

In summary, if the company paid Bob $1 of compensation, he would get to keep $0.65 after tax. If the company used the same pre-tax dollar to pay Joe a dividend, he gets only $0.55 after tax, because the money is taxed both at the corporate level and at the individual level.

Although Joe’s tax rate looks to be 15 percent, the government actually nets almost 30 percent more money ($0.45 instead of $0.35)! So, if the taxes that the company paid on Joe’s share of the earnings are added to the 15 percent that Joe paid personally, the effective tax rate was actually 45 percent compared to Bob’s effective tax rate of 35 percent!



When people, including President Obama, say that those paying capital gains tax are paying less than those paying ordinary income tax, they are ignoring the fact that the capital gains have already been taxed at the corporate level. They are not mentioning that the 15 percent tax at the personal level is a second bite at the apple.

Romney?s Tax Return: You?re Not Getting the Whole Story - International Business Times

sigh...even that is silly. The company pays a tax on its profit. Mitten pays a tax on his profit. It's the PROFIT of each individual (company or person) that is being taxed.

I even changed the names for you and everything! Anyway, there is no difference in what's being said, you're just using different terminology. Fair enough...

 

[Vast LWC]

Yes, goddamnit, let's make capital gains as complicated and confusing as income tax is, because everyone knows the REAL purpose of taxes isn't funding the government, it's telling people which ones liberals like and which ones they don't!

Nooo....

Let's simplify all taxes.

A flat tax rate of about 20% for everyone, that includes all taxes.

Including capital gains, social security taxes, sales taxes, medicare taxes, corporate taxes.

You name it, we include it.

Make a lower tax rate for the uber-poor.

Say the poorest 10% can be exempt, that way they won't starve. Besides we wouldn't make much revenue there anyway.

The next lowest 10% can pay like 10%. Same reasons apply.

Due to the disappearance of the 6% payroll taxes, most people would end up saving money on their taxes.

Finally, make exemptions for the first 2 children a family has, as we still need to help support future generations, and then no other exemptions at all.

That's all. Simple as pie, with something for everyone.

 

[Ravi]

The point was to illustrate that ordinary income is taxed only once, at the personal level, while capital gains are taxed twice, both at the personal level and at the corporate level, thus justifying the differing tax rates for different types of income...

sigh...even that is silly. The company pays a tax on its profit. Mitten pays a tax on his profit. It's the PROFIT of each individual (company or person) that is being taxed.

I even changed the names for you and everything! Anyway, there is no difference in what's being said, you're just using different terminology. Fair enough...

The argument is really as dumb as the inheritance tax argument. THAT money isn't being taxed twice either, the person getting the income is having their income taxed.

 

[Vast LWC]

Its a lot for sure, i probably wont even make that much in my lifetime.

Its funny....when it comes to the Bush tax cuts people talk in total dollars instead of percent, when it comes to romney they talk about percent instead of total dollars.

its like they can't see that the two are inseperable parts of the same subject....they only seem to cherry pick what makes the "war on wealth/class warfare" rhetoric sound better while staying intentionally blind to the honest truth

Who talked about total dollars instead of percentages? That would be a very odd thing to do.

 

[bigrebnc1775]

Yes, goddamnit, let's make capital gains as complicated and confusing as income tax is, because everyone knows the REAL purpose of taxes isn't funding the government, it's telling people which ones liberals like and which ones they don't!

Nooo....

Let's simplify all taxes.

A flat tax rate of about 20% for everyone, that includes all taxes.

Including capital gains, social security taxes, sales taxes, medicare taxes, corporate taxes.

You name it, we include it.

Make a lower tax rate for the uber-poor.

Say the poorest 10% can be exempt, that way they won't starve. Besides we wouldn't make much revenue there anyway.

The next lowest 10% can pay like 10%. Same reasons apply.

Due to the disappearance of the 6% payroll taxes, most people would end up saving money on their taxes.

Finally, make exemptions for the first 2 children a family has, as we still need to help support future generations, and then no other exemptions at all.

That's all. Simple as pie, with something for everyone.

10 percent and that's final no income tax either.

 

[Vast LWC]

Now you have done it....up next on the class warfare agenda "Progressive sales tax rates"

Don't know about all that. But I do know that sales tax is a true "double tax", unlike capital gains taxes, because you're paying tax to use the principle amount of money that you've already paid tax on, not just the further profits from investing it.

Sales Tax = bad.

Except in cases where there are no initial income taxes, like in New Hampshire.

 

[Vast LWC]

Yes, goddamnit, let's make capital gains as complicated and confusing as income tax is, because everyone knows the REAL purpose of taxes isn't funding the government, it's telling people which ones liberals like and which ones they don't!

Nooo....

Let's simplify all taxes.

A flat tax rate of about 20% for everyone, that includes all taxes.

Including capital gains, social security taxes, sales taxes, medicare taxes, corporate taxes.

You name it, we include it.

Make a lower tax rate for the uber-poor.

Say the poorest 10% can be exempt, that way they won't starve. Besides we wouldn't make much revenue there anyway.

The next lowest 10% can pay like 10%. Same reasons apply.

Due to the disappearance of the 6% payroll taxes, most people would end up saving money on their taxes.

Finally, make exemptions for the first 2 children a family has, as we still need to help support future generations, and then no other exemptions at all.

That's all. Simple as pie, with something for everyone.

10 percent and that's final no income tax either.

LOL, we'll have to negotiate. Remember, you won't be paying payroll taxes, so something is going to have to make up for that.

 

[Vast LWC]

So What if pay a lower percentage rate in income tax.
I could care less. At least they are paying the tax. If there is any unfairness in the system it is and has been caused by Congress, both Rpublican and Democratic, who passed the rules aloowing for all the exemptions/loop holes.
If you are going to complain the blame the Congress. The so-called rich are only taking advantage of the rules to save as much of their income as possible. It is the same principal used nby everyone to maximize the largest refund possible or to make the lowest payment as possible. It is the rules which are the problem and Congress has to change them.

Which would be accurate, except that Bain capital was one of the lead lobbyists paying congress to not pass the law they proposed to fix this very loophole just a couple of years back.

So, Romney was one of the main reasons why the law remained the way it was.

 

[PLYMCO_PILGRIM]

Its a lot for sure, i probably wont even make that much in my lifetime.

Its funny....when it comes to the Bush tax cuts people talk in total dollars instead of percent, when it comes to romney they talk about percent instead of total dollars.

its like they can't see that the two are inseperable parts of the same subject....they only seem to cherry pick what makes the "war on wealth/class warfare" rhetoric sound better while staying intentionally blind to the honest truth

Who talked about total dollars instead of percentages? That would be a very odd thing to do.

Well I'm thinking more back to the "bush tax cuts for the rich" threads and comparing how the same people in here complaining about it as a percentage are now ignoring the dollar amount that they had focused on with the "bush tax cuts for the rich" arguments.

I find it odd, i've always talked about both on both subjects.

 

[Trajan]

The article is silly.

It seems to be saying that Mitt gets to pay a lower tax rate because salaries are an expense while profits are not. Mitt pays less because the business has to pay tax on profit. Well, so does the employee. The employee's salary IS a profit on the employee's labor.

EVERYONE who pays the cap gain rate pays it becasue the government understands to some extent, ( some admins more than others) it makes sense to reward RISK. The cap gains issue is a risk reward venture. People will not RISK as much, IF they do not see a commensurate advantage on the back end if successful. And even then before one dime passes to their hands, the government takes a piece via the corporate entity that generated it from the original source.

This whole argument is dishonest without acknowledging that fact.

this is not about that though,imho , its about hammering romney for doing what every single liberal entrepreneur and and investor does too.

Let me ask you a question- how was obamas book proceeds taxed? Do you know? How are the proceeds of that money he earned via those sales used? You think its sitting in 1% interest CD? Does obama have a portfolio where in he has cap gains accrued? has he realized any? What was HIS rate on those gains?

For those that don't know, you are it appears to me employing a very selective form of partisan BS.

I understand about the risk and the reasoning for the lower rate. However, the rate didn't need to be lowered to 15%. People have always invested and they always will. In fact you could make a case that everyone went too far with their risks and helped bring down the economy when the rate was lowered to 15%.

I think book royalties are taxed as regular income, not as a capital gain. I also think he donated his royalties to charity.

But that has nothing to do with the fairness or unfairness of taxing different types of income at different rates.

I can find no mention anywhere when i goggle for obama donating book proceeds or royalties to charity and lynn sweets column most surely would have mentioned it since she mentions his other charitable write off which are part of the record.

Fueled by book profits, Obama earned almost $7million since 2004, when he was elected to the Senate.
By Lynn Sweet on April 16, 2008 7:03 PM | 4 Comments

PHILADELPHIA, PA.—Fueled almost entirely by book profits, Sen. Barack Obama (D-Ill.) and wife Michelle earned almost $7 million since he was elected to the Senate in 2004, with the couple reporting more than $4 million in income for 2007, according to returns released Wednesday.

The couple reported total 2007 income of $4,238,165, of which $3,943,378 was profit from his best-sellers ''Dreams From My Father'' his memoir reissued in 2004 when his political career started to skyrocket and ''The Audacity of Hope,” published in 2006.

The Obama’s paid $1,396,772 in federal taxes and donated $240,370 to charity in 2007.

Since elected to the Senate in 2004, the Obamas’ have seen their income shoot up, almost all from books. In 2004 the Obamas’ reported $207,647 in taxable income; $1.6 million in 2005 (including the book advance); and $983,826 in 2006/
Release of income taxes has become an issue in the presidential campaign.


his children book proceeds apparently where, that was on top of the 70K worth of books the state dept bought, his books since he was in office btw.

his charitable contributions follow a curious line......*shrugs*


5.7% for 2007
6.1% for 2006
4.7% for 2005
1.2% for 2004
1.4% for 2003
0.4% for 2002
0.5% for 2001
1.0% for 2000
Source(s):
http://taxprof.typepad.com/taxprof_blog/…
http://philanthropy.com/news/updates/441…

OK, so you agree, Romney should not be singled out for his rate on his investments then?

 

[Valerie]

sigh...even that is silly. The company pays a tax on its profit. Mitten pays a tax on his profit. It's the PROFIT of each individual (company or person) that is being taxed.

I even changed the names for you and everything! Anyway, there is no difference in what's being said, you're just using different terminology. Fair enough...

The argument is really as dumb as the inheritance tax argument. THAT money isn't being taxed twice either, the person getting the income is having their income taxed.

Wellll.......Yes an individual receiving an inheritance is paying tax on that capital for the first time, but that is not the first time that capital has been taxed either...

I don't think it's dumb to want the government to keep their paws off.



And the point of that article was to illustrate how much tax revenue a corporate dollar generates one way or the other...

 

[Trajan]

So What if pay a lower percentage rate in income tax.
I could care less. At least they are paying the tax. If there is any unfairness in the system it is and has been caused by Congress, both Rpublican and Democratic, who passed the rules aloowing for all the exemptions/loop holes.
If you are going to complain the blame the Congress. The so-called rich are only taking advantage of the rules to save as much of their income as possible. It is the same principal used nby everyone to maximize the largest refund possible or to make the lowest payment as possible. It is the rules which are the problem and Congress has to change them.

Which would be accurate, except that Bain capital was one of the lead lobbyists paying congress to not pass the law they proposed to fix this very loophole just a couple of years back.

So, Romney was one of the main reasons why the law remained the way it was.

really? how many lobbied? names and co's please?

 

[Trajan]

EVERYONE who pays the cap gain rate pays it becasue the government understands to some extent, ( some admins more than others) it makes sense to reward RISK. The cap gains issue is a risk reward venture. People will not RISK as much, IF they do not see a commensurate advantage on the back end if successful. And even then before one dime passes to their hands, the government takes a piece via the corporate entity that generated it from the original source.

This whole argument is dishonest without acknowledging that fact.

this is not about that though,imho , its about hammering romney for doing what every single liberal entrepreneur and and investor does too.

Let me ask you a question- how was obamas book proceeds taxed? Do you know? How are the proceeds of that money he earned via those sales used? You think its sitting in 1% interest CD? Does obama have a portfolio where in he has cap gains accrued? has he realized any? What was HIS rate on those gains?

For those that don't know, you are it appears to me employing a very selective form of partisan BS.

I understand about the risk and the reasoning for the lower rate. However, the rate didn't need to be lowered to 15%. People have always invested and they always will. In fact you could make a case that everyone went too far with their risks and helped bring down the economy when the rate was lowered to 15%.

I think book royalties are taxed as regular income, not as a capital gain. I also think he donated his royalties to charity.

But that has nothing to do with the fairness or unfairness of taxing different types of income at different rates.

Interestingly enough, most of those "charitable donations" were in the form of a tithe that Romney is REQUIRED to pay to the Mormon Church every year, which amounts to a full ten percent.

and so what? why did you put charitable donations in quotations?

 

[PLYMCO_PILGRIM]

Well it hasn't been said for a few pages so here I go one last time

Mitt Romney pays 15% capital gains tax. Every other American Pays a 15% cap gains tax.

He pays no more or less in capital gains then anyone else.


If romney was making the amount of money he is as a salary he would be paying more in taxes, as a percentage and in total dollars, than over 95% of americans.


This whole "The rich pay lower tax rates" is a bunch of dishonest politicing meant to trick the uninformed.

 

[Trajan]

it was already taxed once as income, now you want to double dip.

why cant you just admit it, you want to steal

Again with this argument?

There is no "double tax" on capital gains.

1. Stocks are not based on company earnings. They do not go up and down based on company profit.

2. The principle investment is not taxed again, it is only the value increase that is taxed after an investment is made. Value decreases can in fact be written off as losses.

3. There is no effective difference between wages and dividends, as both are based on how much revenue a company has in the first place. The more a company makes, the more it can pay it's workers, or the more workers it can hire, and the more dividends it can afford to give out.

The only difference between the two is what kind of contribution is being made. In one case, it's time and effort, in the other, it's capital.

Why should my bonus or my overtime be taxed at a MUCH higher rate than dividends when it's basically the same thing?

So, if there is a "double tax" on capital gains then there is a "double tax" on salary in the first place.

 

[PLYMCO_PILGRIM]

it was already taxed once as income, now you want to double dip.

why cant you just admit it, you want to steal

Again with this argument?

There is no "double tax" on capital gains.

1. Stocks are not based on company earnings. They do not go up and down based on company profit.

2. The principle investment is not taxed again, it is only the value increase that is taxed after an investment is made. Value decreases can in fact be written off as losses.

3. There is no effective difference between wages and dividends, as both are based on how much revenue a company has in the first place. The more a company makes, the more it can pay it's workers, or the more workers it can hire, and the more dividends it can afford to give out.

The only difference between the two is what kind of contribution is being made. In one case, it's time and effort, in the other, it's capital.

Why should my bonus or my overtime be taxed at a MUCH higher rate than dividends when it's basically the same thing?

So, if there is a "double tax" on capital gains then there is a "double tax" on salary in the first place.

VastLWC is right. When you initially earn the money you are taxed on it. When you take the money and invest it you are only taxed on profits on that money, not on the initial amount you invested.

 

[Ravi]

EVERYONE who pays the cap gain rate pays it becasue the government understands to some extent, ( some admins more than others) it makes sense to reward RISK. The cap gains issue is a risk reward venture. People will not RISK as much, IF they do not see a commensurate advantage on the back end if successful. And even then before one dime passes to their hands, the government takes a piece via the corporate entity that generated it from the original source.

This whole argument is dishonest without acknowledging that fact.

this is not about that though,imho , its about hammering romney for doing what every single liberal entrepreneur and and investor does too.

Let me ask you a question- how was obamas book proceeds taxed? Do you know? How are the proceeds of that money he earned via those sales used? You think its sitting in 1% interest CD? Does obama have a portfolio where in he has cap gains accrued? has he realized any? What was HIS rate on those gains?

For those that don't know, you are it appears to me employing a very selective form of partisan BS.

I understand about the risk and the reasoning for the lower rate. However, the rate didn't need to be lowered to 15%. People have always invested and they always will. In fact you could make a case that everyone went too far with their risks and helped bring down the economy when the rate was lowered to 15%.

I think book royalties are taxed as regular income, not as a capital gain. I also think he donated his royalties to charity.

But that has nothing to do with the fairness or unfairness of taxing different types of income at different rates.

I can find no mention anywhere when i goggle for obama donating book proceeds or royalties to charity and lynn sweets column most surely would have mentioned it since she mentions his other charitable write off which are part of the record.

Fueled by book profits, Obama earned almost $7million since 2004, when he was elected to the Senate.
By Lynn Sweet on April 16, 2008 7:03 PM | 4 Comments

PHILADELPHIA, PA.—Fueled almost entirely by book profits, Sen. Barack Obama (D-Ill.) and wife Michelle earned almost $7 million since he was elected to the Senate in 2004, with the couple reporting more than $4 million in income for 2007, according to returns released Wednesday.

The couple reported total 2007 income of $4,238,165, of which $3,943,378 was profit from his best-sellers ''Dreams From My Father'' his memoir reissued in 2004 when his political career started to skyrocket and ''The Audacity of Hope,” published in 2006.

The Obama’s paid $1,396,772 in federal taxes and donated $240,370 to charity in 2007.

Since elected to the Senate in 2004, the Obamas’ have seen their income shoot up, almost all from books. In 2004 the Obamas’ reported $207,647 in taxable income; $1.6 million in 2005 (including the book advance); and $983,826 in 2006/
Release of income taxes has become an issue in the presidential campaign.


his children book proceeds apparently where, that was on top of the 70K worth of books the state dept bought, his books since he was in office btw.

his charitable contributions follow a curious line......*shrugs*


5.7% for 2007
6.1% for 2006
4.7% for 2005
1.2% for 2004
1.4% for 2003
0.4% for 2002
0.5% for 2001
1.0% for 2000
Source(s):
http://taxprof.typepad.com/taxprof_blog/…
http://philanthropy.com/news/updates/441…

OK, so you agree, Romney should not be singled out for his rate on his investments then?

I read it here so who knows if it's true, lol.

So he paid taxes on his book earnings under regular income? That's how it appears.

 

[Ravi]

I even changed the names for you and everything! Anyway, there is no difference in what's being said, you're just using different terminology. Fair enough...

The argument is really as dumb as the inheritance tax argument. THAT money isn't being taxed twice either, the person getting the income is having their income taxed.

Wellll.......Yes an individual receiving an inheritance is paying tax on that capital for the first time, but that is not the first time that capital has been taxed either...

I don't think it's dumb to want the government to keep their paws off.



And the point of that article was to illustrate how much tax revenue a corporate dollar generates one way or the other...

Please. If I give you $300,000 it is income to you and taxed.

 

[Vast LWC]

really? how many lobbied? names and co's please?

Here, I'll let the most trusted man in cable news make the case for me:

January 24, 2012 - Elizabeth Warren - The Daily Show With Jon Stewart - Full Episode Video | Comedy Central

You'll want to skip to about 3:55 minutes into it, unless you like watching Jon Stewart that is.

 

[Vast LWC]

And here's the reporting Stewart was referring to in his show:

http://www.nytimes.com/2012/01/11/b...ecomes-part-of-the-debate.html?pagewanted=all