I don’t agree. The investor class, which accounts for the vast majority of capital in the equity market, has little choice. Where else are they going to invest their money? Bonds? Bank accounts? The mattress? They need the market as much as the market needs them. You must agree, or tell me where all the money fleeing the stock market will be going.
Into blue-chip stocks instead of new startups, as a guess. Or into foreign investments. Or parked offshore. Or given that trillions of dollars are sitting on the sidelines, maybe nowhere at all.
Because you’re not a job creator. And if that’s not enough, you’re too busy being a cubicle slave to be a real consumer like your neighbor out on the golf course a couple of times a week supporting the economy. Duh.
The above is only a tiny bit in jest but parse out a lot of the arguments and that’s what I get.
I wonder the same thing as you do. Doubly so if it’s inherited wealth. One thing for someone that punched out at 50. It’s another for someone that had all of life’s advantages plus inherited a pile.
No, I am not saying they should tax the principle, I am saying they should tax the gain.
It’s not just one post, but the whole contribution in this thread. You did identify the basic gist of it in your post #148. And while you may disagree with the specific figures used in the example, that’s all it was, an example. The principle holds fo any set of figures. Sam was trying to illustrate the types of negative impact increasing certain kinds of taxes could have. You seem to want to argue the magnitude of those impacts which I don’t think he is doing just yet.
Before that happens, we must agree that the principle is sound. Like you comment on the Laffer curve - it’s very illustrative but most discussion around it seems to take the form of whether or not the principle is sound, not at what point on the curve we are on. The first part is undeniable, IMO. The second [that being where on the curve we are] is very much debatable.
Why not? Encouraging investment by having lower capital gains tax rates is the status quo. To deviate from that, the onus is on the one who wants to make the change. Currently the tax code is used to encourage or discourage all sorts of behavior.
And this is what I mean by first we have to agree the principle is sound. No one is saying that capital will flee the market. There would likely be an impact at the margins, depending on the magnitude of the change in rate. Is that enough to have a detrimental impact on the economy as a whole? Who knows but at least from a starting point we have to at least agree that increasing the cap gain tax in this way makes certain investments either less lucrative or not viable. It’s only after that part is resolved can we get into whether or not the tradeoff is worth it.
Because taxes have to come from somewhere, else there’d be no functioning government. And the sixteenth amendment.
Hmmm. Does not look correlated to me. Personally I think we should raise the capital gains and dividends rate and will vote accordingly. Obviously, YMMV.
Taxing Capital Gains at Ordinary Rates: Evidence Says Do It…So Does Buffet
Why, though? Serious question.
So they would rather make no money at all, rather than pay a higher capital gains rate? And where is “nowhere at all”? The mattress?
Income that you make from employment is income and is taxed. If you take it and invest it, you will (hopefully) get new income which should be taxed. There is NO SUCH THING AS DOUBLE TAXATION.
Back to the matter at hand- there is no shortage of investment capital. We do not need to give investors incentives. What we lack is customers. So you give people money to spend.
My portfolio has a cash allocation. My taxable account has a larger cash allocation than my tax advantaged accounts.
No, there is double taxation in the sense that dividends are taxed after the company has already paid corporate income tax. I believe we should eliminate corporate taxes (they are just passed on to the consumer anyway), and tax dividends as income to level the playing field.
You are correct about dividends. Where we disagree is on the treatment of capital gains. I think they should enjoy a lower rate than ordinary income, in order to encourage investment.
As long as you index for inflation. Otherwise it really does play into when a person decides to sell an asset.
Some you youngsters may not have experienced times of high inflation, but it’s easy for inflation to eat up all the profit you made, and more, if you tax the return as regular income.
How so? The company makes money and pays tax on it. Then the investors receive dividends and pay tax on the dividends. So the company pays tax on its profits and the investors pay tax on the dividends they receive. Who paid taxes twice?
Good Lord… I would hope that ALL people investing ANYTHING in the market realize this. :smack:
That could make sense, provided we took away the standing of corporations as legal entities and held their owners personally responsible for any and all liabilities thereof.
I suspect few stockholders would be on board, though.
How about taxing wages at a lower rate than capital gains, in order to encourage actual production?
Or maybe we should get the government out of the economic “encouraging” business, and just be fair, and tax all income of all kinds equally.
The answer is simple to my way of thinking.
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Investment has exponentially more risk than that of working and earning a wage and therefore should be taxed lower.
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The tax law has to account for ALL MEANS by which the capital gains are made.
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Whether you or other posters in here agree with it or not, most people believe that investments should be encouraged and taxing capital gains the same as income removes a lot of incentive to invest in the markets.
All that said, I have stated that “trickle down” didn’t work (and in fact made things worse IMO) and that a “middle out” approach has a lot of appeal to me personally.
As was already explained, all “income” is not equal. When you go to work, you are pretty much assured of getting paid, and very much assured that you won’t lose money. When you invest, there is no such assurance.
Do you honestly not that lower tax rates for certain behavior and encouragement of that behavior are related? I’m not sure I’m understanding you correctly.
In any case, I’ve answered your question, how about you answer mine? You said:
Is there anything that would convince you?