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Capital Gains taxes should be higher

M

micrometers

Diamond Member
Capital gains should be taxed as ordinary income IMO. For the ultra-rich, they effectively receive a 15% tax rate on their millions, while a professional who has undergone years of schooling will be paying 33% or 36% depending on Bush or Obama on their six figure income.

Mitt Romney proposes eliminating capital gains for people making under 200k/yr. That would result in all of the CEO's of major companies receiving a 150k salary and generous stock options.

Also, the "carried interest" loophole relies on the 15% tax rate for capital gains.

Instead of fighting over the Bush tax cuts, why don't Democrats simply agree with Republicans that they should be kept in place, while raising capital gains taxes to parity?
 
You do know the difference between long term and short term, right? You raise LTCG and watch capital flee.

Did you know the bush tax cuts lowered LTCG to 5% on the lower and middle class?

How about taxing dividends as LTCG instead of STCG? Do you agree or disagree with that? Are you aware of the implications?
 
LTCG should have some inflation protection built into it. if you buy something for $100, and 20 years later it's worth $200, but a dollar is only worth half what it was, you're not actually wealthier.
 
Raising capital gains taxes does nothing but reduce tax revenue so logically the primary driver of doing so is envy.
 
spidey07 said:
You do know the difference between long term and short term, right? You raise LTCG and watch capital flee.

Did you know the bush tax cuts lowered LTCG to 5% on the lower and middle class?

How about taxing dividends as LTCG instead of STCG? Do you agree or disagree with that? Are you aware of the implications?
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I think capital goes to where there is opportunity, buddy.
 
JS80 said:
Raising capital gains taxes does nothing but reduce tax revenue so logically the primary driver of doing so is envy.
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proof?

Romney in particular is a beneficiary of the cap. gains tax cut. Dude is incredibly wealthy. I'd rather raise taxes on a guy like Mitt Romney than raise taxes on a six-figure earning professional.
 
ElFenix said:
LTCG should have some inflation protection built into it. if you buy something for $100, and 20 years later it's worth $200, but a dollar is only worth half what it was, you're not actually wealthier.
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Exactly.

IMO, the 1 yr holding is too short, at least to make make much sense in the context of inflation.

In the past it has been as long as 18 or 24 months.

If we really wanted to do it properly, we'd actually factor inflation into it as other countries do.

We could have different LTCG rates for different holding periods. E.g., up to 2 yrs, not such a big break. A bigger tax break for 5 yrs, and so on.

The Carried Interest provision also relies heavily upon the 15% rate for dividends.

Fern
 
karmypolitics said:
I think capital goes to where there is opportunity, buddy.
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correct, and increased cap gains taxes would reduce your return.


lets say in a 2 year period the best investment you can make in the US nets you 10%. best investment elsewhere is 9%. assume both have 15% cap gains. so the US investment is slightly better. then the US doubles the cap gains rate. so now in the US you're getting 7% after taxes, and elsewhere you're getting 7.65% after taxes.

now, that's a bit simple as the supply of capital to the US dries up, the bid for the remaining will go up, but you'll still have less overall investment.
 
ElFenix said:
LTCG should have some inflation protection built into it. if you buy something for $100, and 20 years later it's worth $200, but a dollar is only worth half what it was, you're not actually wealthier.
Click to expand...

Yes and no. If you are paid $100 after taxes, and you have that $100 20 years later when the dollar is worth half what it was, you too have lost half your money.

In both cases, you lose half your money if you just keep what you had. If the guy who was paid $100 doubles it, he breaks even but owes taxes on the gain. Same with LTCG.

So we don't need to be OVERLY friendly to the investor. In all these cases, the people are required to make enough money and pay taxes on the gain to own more after inflation.

The worker is of course more likely to spend the $100 (creating profit for the rich guy), if he saves it in an interest savings account paying under 1% interest - which is taxable.

And not only does the 'little guy' pay taxes every year instead of getting to defer it, he pays at the higher 'income tax rate' IIRC, not the CG rate.

The system is already pretty rigged for the 'big' investor - all kinds of better investment opportunities available, higher returns, lower taxes, deferring taxes and more.
 
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Fern said:
Exactly.

IMO, the 1 yr holding is too short, at least to make make much sense in the context of inflation.

In the past it has been as long as 18 or 24 months.

If we really wanted to do it properly, we'd actually factor inflation into it as other countries do.

We could have different LTCG rates for different holding periods. E.g., up to 2 yrs, not such a big break. A bigger tax break for 5 yrs, and so on.

The Carried Interest provision also relies heavily upon the 15% rate for dividends.

Fern
Click to expand...

This. Tax long term capital gains at the same rate as income and you'll eliminate long term investment in the US.

You think investors and corporations are short-sighted now? Wait until they have no incentive to hold anything for longer than the shortest period possible.
 
ElFenix said:
correct, and increased cap gains taxes would reduce your return.


lets say in a 2 year period the best investment you can make in the US nets you 10%. best investment elsewhere is 9%. assume both have 15% cap gains. so the US investment is slightly better. then the US doubles the cap gains rate. so now in the US you're getting 7% after taxes, and elsewhere you're getting 7.65% after taxes.

now, that's a bit simple as the supply of capital to the US dries up, the bid for the remaining will go up, but you'll still have less overall investment.
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well, it depends, now doesn't it? Higher capital gains taxes might discourage investment. Higher marginal tax rates might discourage hard work and success also, no? You have to pick one evil to live with.

I am writing this post in the wake of the Bain Capital ads. Bain was assisted in wrecking private companies by favorable capital gains IMO. lower cap. gains would have encouraged selling to Bain and it would have left Bain with more money to again "invest and wreck."
 
Craig234 said:
Yes and no. If you are paid $100 after taxes, and you have that $100 20 years later when the dollar is worth half what it was, you too have lost half your money.

In both cases, you lose half your money if you just keep what you had. If the guy who was paid $100 doubles it, he breaks even but owes taxes on the gain. Same with LTCG.

So we don't need to be OVERLY friendly to the investor. In all these cases, the people are required to make enough money and pay taxes on the gain to own more after inflation.

The worker is of course more likely to spend the $100 (creating profit for the rich guy), if he saves it in an interest savings account paying under 1% interest - which is taxable.

And not only does the 'little guy' pay taxes every year instead of getting to defer it, he pays at the higher 'income tax rate' IIRC, not the CG rate.

The system is already pretty rigged for the 'big' investor - all kinds of better investment opportunities available, higher returns, lower taxes, deferring taxes and more.
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Craig is an idiot. Nothing new there of course. I'll try to explain it so his neanderthal progressive brain can understand...

If a worker earns $100 and spends it, he has the utility of it immediately. He can buy 50 loaves of bread.

If another worker earns $100 and invests it, he won't have the utility of either the principal or earnings until he sells his investment. So he buys stock in a company and holds it for 30 years, selling it for $200 when the value of the dollar has been cut in half. He then owes taxes on $100, so he only ends up with $180 dollars. Since the dollar is worth half what it was, he can only buy 45 loaves of bread. Long term investment means a measurable decrease in utility.

His best option is to hope that the CEO of the company runs up the value of the stock so quickly by slashing and burning that he can quickly sell while the dollar he spent is still worth something.

Way to destroy all long term thinking and investment in anything, dumbass.

Fail234
 
The problem with the "raising the capital gains tax will decrease investment argument" is that if you follow it to it's logical conclusion we should have a zero capital gains tax. Yes raising it will discourage investment but as Karmypolitics indicated taxation is more or less a sum zero game so that means other taxes have to be higher. If we reduced the corporate tax rate at the same time as raising the capital gains that would offset the negative investment effects.
 
karmypolitics said:
lol, nice troll. taxes are a zero sum game. try to think more.
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I hope you realize that your six figure professional will have signicant capital gains if he is smart. 20 percent would be normal.

Why do you want to tax my dividends as normal income? If you do I will simply not reinvest those dividends.
 
spidey07 said:
I hope you realize that your six figure professional will have signicant capital gains if he is smart. 20 percent would be normal.

Why do you want to tax my dividends as normal income? If you do I will simply not reinvest those dividends.
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this is about broad questions of fairness. People's "rational behavior" changes in accord with the tax system.
 
karmypolitics said:
this is about broad questions of fairness. People's "rational behavior" changes in accord with the tax system.
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And your proposal makes investing capital for gain not rational.

Good job. Capital just fled. It impacts everybody, not just your intended target.

Did you also know most stock options when exercised are taxed as short term? Never had options? Life isn't fair and it is not supposed to be.
 
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Fair to who and measured against what?

Dividends are paid from already taxed profits at the corporate level. Even the 15% is double taxation. Discouraging dividend payout will result in companies hoarding more cash. Paying dividends distributes the cash more widely with increases the chance of spending or reinvesting.

Stock option gains are already taxed as ordinary income.

Taxation on capital gains is already addressed about.

Michael
 
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Why the all or nothing scenarios? Here is something comparable to what you're saying.

Because the progressive tax rate increases the more income you make, people purposely decide to limit their working hours to 30 hours a week so as to not trigger more taxes on income.
 
Engineer said:
Then what are you going to do with them? Place them under your mattress or in your 0.25% savings account?
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Find another investment outside of stock without such a high tax penalty. I'm thinking real estate, I'll help drive the cost of housing even higher. Thanks to savior Bush, cap gains on real estate isn't taxed as CG.
 
"double taxation" seems like a weird way to go. I mean, you could say that a shopkeeper suffered from double taxation because the amount of consumer money available to him is taxed first by the income tax, meaning that any revenue and then resulting profit will have been "double taxed"
 
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