Trump 2017 Tax Cut Wasn’t Just Designed For Wealthy, It Was Customized For Specific Bilionaires

[Winston]

Nothing is more effective than reducing government revenues.......

But how do lower capital gains rates misallocate resources?
How would higher rates lead to better allocation? Any specifics?

The classic example is the surgeon. He gets taxed more for doing what he was trained to do than he does for speculating in the market. That is great, if you want to encourage speculation and discourage work. The surgeon makes half a million a year saving people's lives and pays almost two hundred grand in taxes. The coupon clipper makes half a million a year sitting on his ass, he pays seventy five grand.

But I like the ditch digger. Ditch digger digs ditches, he pays a higher tax rate than the dude that rents him a shovel. Before long, no one wants to dig ditches and everyone wants to rent out shovels. Hello, look around. How is it the right always complains about people not wanting to work, and yet they support punishing work with higher taxes than unearned income.

The proof is in the numbers. When capital gains were taxed as ordinary income, and sometimes at rates approaching ninety percent, GDP growth averaged well over 4.5%. Since we started taxing unearned income less than earned income we are lucky to hit 3.5%.

It is really easy to tell when capital gains rates are too low, they result in excessive speculation. The wide fluctuations in the stock market indicate that is precisely what is happening.

Here is the thing, capital gains are taxed less than earned income for the simple reason that, like in 2010, 97% of all capital gains went to those earning more than a million dollars a year. Unless you reside in that income cohort, you are an idiot supporting this dysfunctional policy. And to me, even if you do make that million a year, the market inefficiency resulting from this dysfunctional policy, suppresses the returns you are getting. It is penny wise and pound foolish.

 

[Toddsterpatriot]

The classic example is the surgeon. He gets taxed more for doing what he was trained to do than he does for speculating in the market. That is great, if you want to encourage speculation and discourage work. The surgeon makes half a million a year saving people's lives and pays almost two hundred grand in taxes. The coupon clipper makes half a million a year sitting on his ass, he pays seventy five grand.

But I like the ditch digger. Ditch digger digs ditches, he pays a higher tax rate than the dude that rents him a shovel. Before long, no one wants to dig ditches and everyone wants to rent out shovels. Hello, look around. How is it the right always complains about people not wanting to work, and yet they support punishing work with higher taxes than unearned income.

The proof is in the numbers. When capital gains were taxed as ordinary income, and sometimes at rates approaching ninety percent, GDP growth averaged well over 4.5%. Since we started taxing unearned income less than earned income we are lucky to hit 3.5%.

It is really easy to tell when capital gains rates are too low, they result in excessive speculation. The wide fluctuations in the stock market indicate that is precisely what is happening.

Here is the thing, capital gains are taxed less than earned income for the simple reason that, like in 2010, 97% of all capital gains went to those earning more than a million dollars a year. Unless you reside in that income cohort, you are an idiot supporting this dysfunctional policy. And to me, even if you do make that million a year, the market inefficiency resulting from this dysfunctional policy, suppresses the returns you are getting. It is penny wise and pound foolish.

The classic example is the surgeon. He gets taxed more for doing what he was trained to do than he does for speculating in the market. That is great, if you want to encourage speculation and discourage work.

The surgeon is going to work less because the long-term capital gain rate is 15% below $445,850?

The surgeon makes half a million a year saving people's lives and pays almost two hundred grand in taxes.

Closer to $145,000.

But I like the ditch digger. Ditch digger digs ditches, he pays a higher tax rate than the dude that rents him a shovel.

Shit, that ditch digger is making some bank!!!