I understand the value of American investing. But too me, it seems extreme. You work your ass off to make say 500K in a year and you are probably paying at least twice in much in taxes (percentage wise) than the person who made 10 million on investments. Just doesn't seem right to me . . . but I'm not an economist and I'm guessing all those politicians who make their fortune in investments can explain to us why it is valuable to have a much higher income tax than capital gains tax.
great post on all levels, repped the only thing we can do is structure the tax laws to encourage investment in this country, ot you get shit like the steel mills that no longer exist here, or te chineese buying paper production plants and demoing them here to enshure zero compitition
Bury it in the yard in some other country where the tax rates are more favorable. And short term capital gains are taxed at regular income tax rates.
Another thing, as I dig myself in a hole because I'm probably all wet about this capital gains tax, but wouldn't you feel that if you did make your fortune by investing in America, that you should pay a higher portion of that back to the country that allowed you the opportunity to invest and make all that money. I mean when you work, that is you working hard for money. When you make it through investments, you really aren't working that hard and only because of this country and investing it that you made money. it seems logical to me that you give more of the money to the gov't in that situation than when your busting your butt everyday at work. I can see being underemployed having a bad attitude about paying taxes,I don't get investing money in American companies or whatever and then bitching about paying taxes on that even if it was 20-40%.
Thanks for the rep (right back at you) and more importantly the civil discussion about capital gains tax. As stated, I really don't understand the economics behind it and you are right, investing in America is important. OK group hug
No. Encouraging investment here in our markets keeps a lot of jobs here. If we have less a chance of companies going IPO because nobody wants to pay the tax after taking the risk, there will be a lot fewer companies formed. They ARE investing in America.
We definitely see the world and our obligations to our country differently. I don't think raising capital gains will kill investing . . . Romney and Obama and many other rich people will continue to invest and make money that way, even if the overall percentage is lower, IMO. Of course it's a good thing I'm not president because I agree it would not be good to kill investing in America. But with your philosophy, if we lower personal income tax, maybe a lot more of these entitled self proclaimed victims will go back to work . . . wait a minute, I think I understand Mitt's reasoning.
I think you have it backwards, but I'm not flaming you. Keeping capital gains taxes reasonable allows the "middle class" to invest in our markets without paying high rates if they find a solid investment. Now, if you're talking about restructuring the capital gains tax based on net worth, that's a different argument, but as somebody is "middle class" and has investments, I'm a bit upset that the capital gains tax is increasing under ObamaCare, and the dividends tax is set to skyrocket. I'll be pulling my money immediately out of the market and into gold if the Dems get majorities in this election, and Obama wins. If Obama wins, and the GOP gains the Senate and keeps the House, I think that the Dems in the Senate will be wise enough to extend the tax "cuts" that are still somehow "cuts" 12 years after they took effect. http://www.smartmoney.com/taxes/income/what-obamacare-may-mean-for-taxes-1335896160486/
Obama paid 19% effective tax rate last year on ~$1M in income. Fair? In any case, when capital gains tax was 40% in 1977, the IRS raised $27B in inflation adjusted dollars compared to the $122B it raised when the tax was 15% in 2007. And capital gains are not a one-time thing. If you buy 100 shares of stock in a company today at $10 and 100 shares next year at $20, and the stock goes to $100 and you sell 100 shares, which stock are you selling? How much is the gain, in other words. And the lower gains rate is designed to encourage people to realize their gains, which encourages the capital to move to newer and better investments. If you buy a stock in company A for $1 and it goes to $100 and you sell, you make $99. But you buy a stock in company B the next year for $100 and it goes to $1, you've paid tax on the $99 gain, but you don't get a refund for the $99 loss the following year. The tax is not exactly fair in that case, eh? You have effectively been taxed on your net worth, not on your actual income.
You do realize that many "middle class" people have their 401ks tied into markets, and also that many of us invest in the markets outside of the 401k tax shelter for additional income, right? Obama has even talked about taxing income prior to it going into a 401k, which is troubling.
In 1996, I bought a 1972 VW Bus for $2800. This is 24 years later. It originally sold for about $2800 in 1972, so it must be one of those rare vehicles that kept its value (today one would cost $8K or more). Anyhow, over the years, every time that Bus was sold, someone paid sales tax to the DMV. No question in my mind that the thing made the state way more than $2800 in taxes. The same thing happens to a share of stock (gets taxed over and over again).
Well there is investing like we do (extra income and 401K or deferred comp) and then there is investing like the rich folks do who make millions a year in investing. Sadly enough, even if they raised capital gains tax on me (as a middle income earner), it would not raise my taxes much (obviously don't get taxed on our 401K). I think the rich have a lot more to lose, even percentage wise, than the typical middle class earner. In fact my other beef is us middle class earner invest our money blindly into wall street. Yes there is a risk in investing, but somehow I think the rich have a lot less risk or at least understand what they are investing v. middle class that blindly trust the rich to guide them.
I'll make the math really simple for everyone. Romney made ~$14M. He paid ~$2M in taxes and another $4M to charity. $14M - $2M - $4M = $8M. That's what he made, net, at the end of the day on his $14M income.
Thanks, that helps me understand one reason for the low tax rate . . . generate more buying and selling and thus more money going to gov't. Still wonder what would happen if they raised the tax as i don't see it curbing the rich addiction to capital gains. Once you go soft and can rely on invest money to live . . . it's like crack. Besides I'm sure wall street, with all their investment advisors will get people buying and selling with some kind of news about why one should buy or sell. Can you tell I'm a little jaded about wall street.
Yep. And Obama made $1.8M in 2009, ~$850K in 2008, ~$6M in 2008, $2.7M in 2007, $4.2M in 2006. Romney made ~3x what Obama did in his best year.
Wow. So he made a flat 14M and didn't have any losses or deductions. I take it back about the percentage he donated. Or is that net income I'm talking about?
His adjusted income was $14M - $4M, in theory. He didn't deduct the maximum of $4M like he should have. He is allowed to amend his prior tax return and can get a refund if he's due one.
Well there is income in the total amount he made this year vs adjusted income after he takes deductions and the like. I get he didn't take the charitable deduction (that I thought was limited). But being a very small player in the tax and investment world, and owning a couple of rentals, I know how to take in income and how to create temporary losses. I'm wondering if Romney made a bunch more than 14M, but by the time he factors in deductions including "losses" that it ended up at 14M. Do his tax returns show this? Personally my gross income was much more than my adjusted income.
The Romneys paid $1,935,708 in taxes on $13,696,951 of mostly investment income for an effective tax rate of 14.1 percent. The Obamas paid an effective tax rate of 20.5 percent in 2011 . . . a lower rate than the president's secretary, according to the White House. This is what is wrong with our system
