Obama's REAL Religion

[NYcarbineer]

wow is there anything you will post thats your own?

Bulletin: Every post with my avi is my own.

sure it is, and your avi is you.

If you can get drunk enough to make her look like her avi, before you pass out, you are one world class liquor holder.

 

[8537]

Reagan raised capital gains taxes, so he had no religion either, or no religion, whatever mythical metaphoric analagy you want.

This moment revealed that Obama isn’t simply or even primarily interested in raising taxes for economic reasons (e.g., raising revenues or spurring growth). He sees taxes through a moral prism, as an instrument to advance “fairness,” which he takes to mean leveling higher taxes on wealthy Americans in order to decrease income inequality

Why should I pay more for taxes on my labor, than a man that gets income from an investment?

The man that made the investment already paid taxes on the money that he is investing so he gets taxed twice.

He doesn't get taxed on the money he invested. He gets taxed on the gains from that investment.

 

[8537]

Post #10, dim-wit.

No, I already debunked that nonsense. People working is advantageous to the economy. People passing around savings does not benefit the economy.

So try answering the question this time, "dim-wit" lest we begin to think you"ceased your education at the fifth grade level": Why should our tax code favor financial capital over human capital?

The tax code does not favor financial capital over human capital,

Of course it does. It taxes human capital at 15.3% plus what ever income tax bracket that income falls into.

it taxes capital gains at a rate between zero and 15%.

but if you think about it for a minute, where do you think your typical employer gets the money to start his business, make it grow, and hire those employees to be "advantageous to the economy"?

Profits. operating revenue.

Correct.

A dollar invested in a stock is never taxed again; when you sell the stock, your original investment is subtracted from the price you received for it and you only pay tax on the difference (the "capital gain"). The double taxation comes in when you receive a dividend. You see, the corporation first pays tax on the profit. Then they pay the dividend to the stockholder and get no tax deduction for paying the dividend, yet the stockholder has to pay income tax on it. That's double tax, and is often why a company's capital structure leans more heavily to debt, since the tax code allows a deduction for the interest paid to a debtholder. As a result, the company can borrow more with the same amount of profit because the government is not getting a double share. PoliticalChic laid out these extra levels of taxation perfectly well in her referenced earlier post, and was entirely correct.

We don't tax dollars, we tax people who receive them. When dividends are distributed, income is being transferred from one person (though a fictitious one) to another person who therefore pays taxes on that income.

 

[BillyV]

No, I already debunked that nonsense. People working is advantageous to the economy. People passing around savings does not benefit the economy.
So try answering the question this time, "dim-wit" lest we begin to think you"ceased your education at the fifth grade level": Why should our tax code favor financial capital over human capital?

The tax code does not favor financial capital over human capital,

Of course it does. It taxes human capital at 15.3% plus what ever income tax bracket that income falls into.
it taxes capital gains at a rate between zero and 15%.

First of all, until Social Security and Medicare (your 15.3%) become welfare programs that are given only to lower income earners, this is no more a tax than your 401K contribution is a tax; it’s just a forced savings program for retirement. But even if you accept that it is a tax, for every dollar of earnings you have the potential to pay 28% income tax plus SS/Medicare tax (which is actually 14.2% if you assume the employer portion is part of the mix; $100 of earnings plus the $7.65 employer contribution = $107.65; $15.30 tax is 14.2% of that $107.65), you are subject to about 42.2% of tax on your earnings. That same $107.65 on investment income would be subject to 35% corporate tax and then 15% of the remainder in dividend tax; about 44.75%.

but if you think about it for a minute, where do you think your typical employer gets the money to start his business, make it grow, and hire those employees to be "advantageous to the economy"?

Profits. operating revenue.

So you want to wait to hire people until previously earned profits allow it? Where does the money come from to create the plant, equipment and the myriad other costs of either start up or expansion? Most companies invest for long term profitability and expect the invested capital to be paid for over a number of years; no investors, no plant and equipment, no jobs for those advantageous workers.

We don't tax dollars, we tax people who receive them. When dividends are distributed, income is being transferred from one person (though a fictitious one) to another person who therefore pays taxes on that income.

Well, what do you know? So corporations are people?
Your analysis is flawed. If I invest a dollar, I measure my return by what I receive back. You are taxing the investor for the corporate income tax and the dividend tax, because that dollar is not being “transferred” from one person to another; my invested dollar remains mine even though I have used it to buy a share of stock. This is why the IRS has created pass-through corporations (S-corporations) for smaller businesses to use to avoid what even the IRS characterizes as "double taxation."

 

[8537]

First of all, until Social Security and Medicare (your 15.3%) become welfare programs that are given only to lower income earners, this is no more a tax than your 401K contribution is a tax; it’s just a forced savings program for retirement. But even if you accept that it is a tax, for every dollar of earnings you have the potential to pay 28% income tax plus SS/Medicare tax (which is actually 14.2% if you assume the employer portion is part of the mix; $100 of earnings plus the $7.65 employer contribution = $107.65; $15.30 tax is 14.2% of that $107.65), you are subject to about 42.2% of tax on your earnings. That same $107.65 on investment income would be subject to 35% corporate tax and then 15% of the remainder in dividend tax; about 44.75%.

Except we don't tax money. We tax the people receiving it. By your method, a single dollar would be taxed over 100% in a given year.

Profits. operating revenue.

So you want to wait to hire people until previously earned profits allow it? Where does the money come from to create the plant, equipment and the myriad other costs of either start up or expansion? Most companies invest for long term profitability and expect the invested capital to be paid for over a number of years; no investors, no plant and equipment, no jobs for those advantageous workers.

Current payroll is paid out operating revenues. Taxing capital at the same rate as labor simply makes the tradeoff between the two equal in the eyes of the government.

An employer makes a decision based on marginal benefit: Should I employ more capital or more labor? Somehow, Republicans and some Democrats have concluded that we should encourage this person to chose capital - and even worse, in many cases we encourage financial capital.

We don't tax dollars, we tax people who receive them. When dividends are distributed, income is being transferred from one person (though a fictitious one) to another person who therefore pays taxes on that income.

Well, what do you know? So corporations are people?

For purposes of income and expenses they certainly are.

Your analysis is flawed. If I invest a dollar, I measure my return by what I receive back. You are taxing the investor for the corporate income tax and the dividend tax, because that dollar is not being “transferred” from one person to another;

Yes it is! You just clarified that corporations are people. You can't have it both ways. Money that is transferred from one person to another is taxed as income - be those two people with pulses or one fictitious and one alive.

 

[BillyV]

First of all, until Social Security and Medicare (your 15.3%) become welfare programs that are given only to lower income earners, this is no more a tax than your 401K contribution is a tax; it’s just a forced savings program for retirement. But even if you accept that it is a tax, for every dollar of earnings you have the potential to pay 28% income tax plus SS/Medicare tax (which is actually 14.2% if you assume the employer portion is part of the mix; $100 of earnings plus the $7.65 employer contribution = $107.65; $15.30 tax is 14.2% of that $107.65), you are subject to about 42.2% of tax on your earnings. That same $107.65 on investment income would be subject to 35% corporate tax and then 15% of the remainder in dividend tax; about 44.75%.

Except we don't tax money. We tax the people receiving it. By your method, a single dollar would be taxed over 100% in a given year.
No, in this case we are taxing the same person twice; as I said, I don't relinquish ownership of my invested dollar, so there is no transfer of money. Your logic is what makes corporate leverage more advantageous, and that incentivizes more concentration of wealth. When a corporation borrows tax-advantaged money, it can enrich fewer shareholders to a greater degree.

Profits. operating revenue.

Current payroll is paid out operating revenues. Taxing capital at the same rate as labor simply makes the tradeoff between the two equal in the eyes of the government.

An employer makes a decision based on marginal benefit: Should I employ more capital or more labor? Somehow, Republicans and some Democrats have concluded that we should encourage this person to chose capital - and even worse, in many cases we encourage financial capital.
I think you're confusing "investment capital" with capital assets. An investment in a corporation can be used to pay for either or both. How much investment capital was required to pay for the tens of thousands of software engineers to create Windows or other high technology products? In that case the investment capital was used to purchase "human capital". In any case, there is no tax benefit to investing in capital assets; the tax deductions available for capital assets in the form of depreciation are spread over a long period of time; human capital is immediately deductible.

Well, what do you know? So corporations are people?

For purposes of income and expenses they certainly are.
I hope you're consistent with that position and Citizens United.

Your analysis is flawed. If I invest a dollar, I measure my return by what I receive back. You are taxing the investor for the corporate income tax and the dividend tax, because that dollar is not being “transferred” from one person to another;

Yes it is! You just clarified that corporations are people. You can't have it both ways. Money that is transferred from one person to another is taxed as income - be those two people with pulses or one fictitious and one alive.

Not when the profit that generated the return has already been taxed. If a corporation was given a tax deduction for the payment of a dividend as they are for a payment of interest, I would agree that dividends should be taxed at ordinary rates to the recipient. But the corporation does not get to treat a dividend as a business expense, hence the inequity of taxing them at ordinary rates. The reduced taxation of “qualified dividends” puts them on a more equal footing with the taxation other types of invested funds.

 

[8537]

No, in this case we are taxing the same person twice; as I said, I don't relinquish ownership of my invested dollar, so there is no transfer of money. Your logic is what makes corporate leverage more advantageous, and that incentivizes more concentration of wealth. When a corporation borrows tax-advantaged money, it can enrich fewer shareholders to a greater degree. [/COLOR][/B]

Of course you relinquish ownership of that dollar. the other person - the corporation - can put your debt and/or equity to use in any manner it sees fit. Your only recourse is to sell that debt or equity or demand changes.

I think you're confusing "investment capital" with capital assets. An investment in a corporation can be used to pay for either or both. How much investment capital was required to pay for the tens of thousands of software engineers to create Windows or other high technology products? In that case the investment capital was used to purchase "human capital". In any case, there is no tax benefit to investing in capital assets; the tax deductions available for capital assets in the form of depreciation are spread over a long period of time; human capital is immediately deductible.

None of that is relevant to the point. What do you meant there's "no tax benefit to investing in capital"? Of COURSE there is. Capital doesn't require a 15.3% contribution for FICA, nor unemployment insurance etc...

Not when the profit that generated the return has already been taxed.

THe "profit generated" may or may not have been taxed, but that doesn't matter. That's a tax on the corporate personhood. When returns are paid to an individual, that's a tax on that individuals income.

If a corporation was given a tax deduction for the payment of a dividend as they are for a payment of interest, I would agree that dividends should be taxed at ordinary rates to the recipient.

^That's actually a very interesting notion.

 

[BillyV]

I think you're confusing "investment capital" with capital assets. An investment in a corporation can be used to pay for either or both. How much investment capital was required to pay for the tens of thousands of software engineers to create Windows or other high technology products? In that case the investment capital was used to purchase "human capital". In any case, there is no tax benefit to investing in capital assets; the tax deductions available for capital assets in the form of depreciation are spread over a long period of time; human capital is immediately deductible.

None of that is relevant to the point. What do you meant there's "no tax benefit to investing in capital"? Of COURSE there is. Capital doesn't require a 15.3% contribution for FICA, nor unemployment insurance etc...

You're right, it's not relevant to the point, but it was in response to your statement "Should I employ more capital or more labor? Somehow, Republicans and some Democrats have concluded that we should encourage this person to chose capital." That decision should hinge on which leads to more efficiency and/or lower costs of production. But no, there is no inherent tax benefit from investing in machinery or equipment ("capital"). If I pay 100 employees $1,000 to perform some function, I get a tax deduction for 100% of that immediately. If, instead, I buy a machine for $100,000 to perform that same function, I get maybe 10% of that as a tax deduction and the rest comes later, over a period of several years. So I would be paying tax on any income earned from that machine's production before I realized the tax benefit. And by the way, the employer's part of FICA is only 7.65%; the rest is paid by the employee.

 

[8537]

[

You're right, it's not relevant to the point, but it was in response to your statement "Should I employ more capital or more labor? Somehow, Republicans and some Democrats have concluded that we should encourage this person to chose capital." That decision should hinge on which leads to more efficiency and/or lower costs of production.

I agree - which is why tax policy should treat them equally instead of favoring capital.

But no, there is no inherent tax benefit from investing in machinery or equipment ("capital"). If I pay 100 employees $1,000 to perform some function, I get a tax deduction for 100% of that immediately. If, instead, I buy a machine for $100,000 to perform that same function, I get maybe 10% of that as a tax deduction and the rest comes later, over a period of several years. So I would be paying tax on any income earned from that machine's production before I realized the tax benefit. And by the way, the employer's part of FICA is only 7.65%; the rest is paid by the employee.

If your company does not turn a profit after deductions as reported to the IRS, then the purchase of the capital does not impact your tax burden.

On the other hand, if your company does not turn a profit you still are left to pay the taxes related to your employees.

 

[BillyV]

[

You're right, it's not relevant to the point, but it was in response to your statement "Should I employ more capital or more labor? Somehow, Republicans and some Democrats have concluded that we should encourage this person to chose capital." That decision should hinge on which leads to more efficiency and/or lower costs of production.

I agree - which is why tax policy should treat them equally instead of favoring capital.

But no, there is no inherent tax benefit from investing in machinery or equipment ("capital"). If I pay 100 employees $1,000 to perform some function, I get a tax deduction for 100% of that immediately. If, instead, I buy a machine for $100,000 to perform that same function, I get maybe 10% of that as a tax deduction and the rest comes later, over a period of several years. So I would be paying tax on any income earned from that machine's production before I realized the tax benefit. And by the way, the employer's part of FICA is only 7.65%; the rest is paid by the employee.

If your company does not turn a profit after deductions as reported to the IRS, then the purchase of the capital does not impact your tax burden.

On the other hand, if your company does not turn a profit you still are left to pay the taxes related to your employees.

"I agree - which is why tax policy should treat them equally instead of favoring capital."
The way to treat them equally is to make both immediately deductible, instead of favoring labor with an immediate deduction.

If your company does not turn a profit after deductions as reported to the IRS, then the purchase of the capital does not impact your tax burden.

On the other hand, if your company does not turn a profit you still are left to pay the taxes related to your employees.

These decisions (of capital vs labor) are made in advance; if you came to the conclusion that you wouldn't make a profit, you wouldn't move forward. In any case, if it wasn't ultimately profitable notwithstanding your expectation of success, it's easier to eliminate employees than equipment, as was well illustrated in early 2009.

 

[8537]

"I agree - which is why tax policy should treat them equally instead of favoring capital."
The way to treat them equally is to make both immediately deductible, instead of favoring labor with an immediate deduction.

OK. Equal tax rates and equal time of deduction? That would work for me.

But doesn't it make sense that you can deduct wages as they are paid, and capital as it is used? In other words, you deduct wages as a flow - over the period of time the person is working. Why would you deduct capital in a single move when the benefit of that capital is derived over time, just like an employee?

These decisions (of capital vs labor) are made in advance; if you came to the conclusion that you wouldn't make a profit, you wouldn't move forward. In any case, if it wasn't ultimately profitable notwithstanding your expectation of success, it's easier to eliminate employees than equipment, as was well illustrated in early 2009.

^That last point about elimination's a good one.

 

[BillyV]

"I agree - which is why tax policy should treat them equally instead of favoring capital."
The way to treat them equally is to make both immediately deductible, instead of favoring labor with an immediate deduction.

OK. Equal tax rates and equal time of deduction? That would work for me.

But doesn't it make sense that you can deduct wages as they are paid, and capital as it is used? In other words, you deduct wages as a flow - over the period of time the person is working. Why would you deduct capital in a single move when the benefit of that capital is derived over time, just like an employee?

Of course; I'm overstating the case to make a point, and that is that the tax code does not favor capital over labor. The economic reality is that a capital asset is owned and has a long life compared to an employee, and as such should be capitalized and depreciated over time. I will say, though, the recent rules that allowed 100% expensing of equipment (which ended last year) was a pleasant surprise that allowed us to add a significant amount of new equipment which we probably would not have otherwise decided to buy. Those equipment acquisitions required us to hire several new employees to maintain and operate them. Since we will make a profit from their use, the government will get additional income taxes, payroll taxes, and will pay less unemployment, both from us and the companies that built and sold the equipment. Seems like a win-win, and the government's only cost is interest from delaying the collection of taxes related to the extra equipment deductions we get this year, which will not be available in future years.