Obama: Raise Taxes, Penalize Business

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Vic

Elite Member
Jun 12, 2001
50,422
14,333
136
Originally posted by: XMan
Originally posted by: blackangst1
Originally posted by: RightIsWrong
Originally posted by: GTaudiophile
Why oh why can we not just cut government spending??????

SLASH AND BURN!!!

Why not do both? That's how we ended up with a surplus in the late 90s.

We didnt have a surplus due to cutbacks in spending. The nation budget has not decreased from one year to the next since 1932.

Bold that, and shout that to the heavens.

The nation budget has not decreased from one year to the next since 1932.

The nation budget has not decreased from one year to the next since 1932.

The nation budget has not decreased from one year to the next since 1932.

The nation budget has not decreased from one year to the next since 1932.

The nation budget has not decreased from one year to the next since 1932.

The nation budget has not decreased from one year to the next since 1932.

The nation budget has not decreased from one year to the next since 1932.

The nation budget has not decreased from one year to the next since 1932.

76 YEARS of unchecked GROWTH

Somebody needs to tell McCain and Obama, it's the SPENDING, stupid.

I agree with your point, that both candidates need to focus on spending, however, I already pointed out that year-over-year decreases were seen during Truman's admin following WWII. Probably the biggest reduction in government size in history.
And keep in mind that inflation has increased considerably since 1932, where in decades before (going back to the Civil War) deflation was usually a bigger worry than inflation. A consequence of going off the Gold Standard more than anything else. Using inflation-adjusted dollars, some other modern Presidents have actually managed year-over-year decreases (although very minor).
And of course, the bigger worry is not just overall spending, but where the money goes. What should be shouted to the Heavens is the fact that government does some things well, and some things poorly, and the most of the waste comes from trying to force the latter.
 

CADsortaGUY

Lifer
Oct 19, 2001
25,162
1
76
www.ShawCAD.com
Originally posted by: XMan
Originally posted by: blackangst1
Originally posted by: RightIsWrong
Originally posted by: GTaudiophile
Why oh why can we not just cut government spending??????

SLASH AND BURN!!!

Why not do both? That's how we ended up with a surplus in the late 90s.

We didnt have a surplus due to cutbacks in spending. The nation budget has not decreased from one year to the next since 1932.

Bold that, and shout that to the heavens.

The nation budget has not decreased from one year to the next since 1932.

The nation budget has not decreased from one year to the next since 1932.

The nation budget has not decreased from one year to the next since 1932.

The nation budget has not decreased from one year to the next since 1932.

The nation budget has not decreased from one year to the next since 1932.

The nation budget has not decreased from one year to the next since 1932.

The nation budget has not decreased from one year to the next since 1932.

The nation budget has not decreased from one year to the next since 1932.

76 YEARS of unchecked GROWTH

Somebody needs to tell McCain and Obama, it's the SPENDING, stupid.

But but but... we need UHC...cradle to grave care by the Feds you know...
 

BoberFett

Lifer
Oct 9, 1999
37,562
9
81
Originally posted by: Carbo
So far, this empty suit has been specific on two things: he is going to increase the Capital Gains tax, and now he wants to impose a windfall profits tax. Do you see a pattern here?

Why shouldn't capital gains be taxed higher? Why should the money I earn through my blood, sweat and tears be taxed higher than money earned by investors? Capital gains should be taxed at the same rate as income.

As far as windfall tax, it all depends on how it applies.
 

BoberFett

Lifer
Oct 9, 1999
37,562
9
81
Originally posted by: sactoking
Income tax does not equal capital gains tax. Income tax is a tax on income. Capital gains tax is a tax on realized wealth.

Increasing CGT is stupid. That discourages saving, investing, and wealth building. That is the LAST thing we should be discouraging. That is made even more relevant since our benevolent government, no matter which party was "in control", has never proven to be able to allocate increased tax revenue to paying down debt. Instead, it has an almost-perfect history of allocating the new revenue to more unnecessary programs and expenditures. Increasing the CGT has all of the drawbacks of reduced savings AND all of the drawbacks of increased spending, with none of the benefits of increased revenue.

Wrong.

Capital gains are only realized when you sell an asset. There's no disincentive to invest. You'll still make more money investing one million dollars than you will by burying it in a coffee can out back. But if your investments net you millions of dollars, why shouldn't that all count as income? Why should a person whose hundred thousandth dollar is earned through the sweat of their brow be taxed at 35% while the person whose hundred thousandth dollar made through investing only be taxed at 15%?

Both earned $100K, but one is getting screwed.
 

Vic

Elite Member
Jun 12, 2001
50,422
14,333
136
Originally posted by: CADsortaGUY
But but but... we need UHC...cradle to grave care by the Feds you know...

You mean like Bush's pet project "pride of his administration" MMA 2003, the largest and most expensive act of socialized healthcare legislation in US history?

Facts just get in the way for partisan hacks, don't they? :roll:
 

Vic

Elite Member
Jun 12, 2001
50,422
14,333
136
Originally posted by: BoberFett
Originally posted by: Carbo
So far, this empty suit has been specific on two things: he is going to increase the Capital Gains tax, and now he wants to impose a windfall profits tax. Do you see a pattern here?

Why shouldn't capital gains be taxed higher? Why should the money I earn through my blood, sweat and tears be taxed higher than money earned by investors? Capital gains should be taxed at the same rate as income.

As far as windfall tax, it all depends on how it applies.

Because they want you to believe that you are beholden to these investors for the opportunity to earn by means of your own labor.
 

blackangst1

Lifer
Feb 23, 2005
22,902
2,359
126
Originally posted by: Vic

I agree with your point, that both candidates need to focus on spending, however, I already pointed out that year-over-year decreases were seen during Truman's admin following WWII. Probably the biggest reduction in government size in history.

Sure he may have decreased spending *IN SOME AREAS* but NOT overall. His budgets INCREASED EVERY YEAR he was in office.
 

lupi

Lifer
Apr 8, 2001
32,539
260
126
Originally posted by: RightIsWrong
Originally posted by: lupi
Here's the homepage for Mark Warner's Senate campaign, the ad is mostly about the economy. Notice the main trend discussed in it. Something the O man has totally neglected so far.

Text


It's not like the WSJ has called the BHO economic plan "Nanny State on Steroids". oh wait.....

And it's not like the WSJ would have anything nice to say about anyone that would propose any taxes that hit themselves, their targeted audience or corporate America.

Take what the WSJ's editorial staff has to say with a pound of salt when it comes to a politician's economic plans either in favor of or against.

As for the "Warner" approach to the economy...who here hasn't been saying the same thing? Oh, and if you would go to Obama's website, you would find this:

Restore Fiscal Discipline to Washington

* Reinstate PAYGO Rules: Obama believes that a critical step in restoring fiscal discipline is enforcing pay-as-you-go (PAYGO) budgeting rules which require new spending commitments or tax changes to be paid for by cuts to other programs or new revenue.

* Reverse Bush Tax Cuts for the Wealthy: Obama will protect tax cuts for poor and middle class families, but he will reverse most of the Bush tax cuts for the wealthiest taxpayers.

* Cut Pork Barrel Spending: Obama introduced and passed bipartisan legislation that would require more disclosure and transparency for special-interest earmarks. Obama believes that spending that cannot withstand public scrutiny cannot be justified. Obama will slash earmarks to no greater than year 2001 levels and ensure all spending decisions are open to the public.

* Make Government Spending More Accountable and Efficient: Obama will ensure that federal contracts over $25,000 are competitively bid. Obama will also increase the efficiency of government programs through better use of technology, stronger management that demands accountability and by leveraging the government's high-volume purchasing power to get lower prices.

* End Wasteful Government Spending: Obama will stop funding wasteful, obsolete federal government programs that make no financial sense. Obama has called for an end to subsidies for oil and gas companies that are enjoying record profits, as well as the elimination of subsidies to the private student loan industry which has repeatedly used unethical business practices. Obama will also tackle wasteful spending in the Medicare program.

Make the Tax System More Fair and Efficient


* End Tax Haven Abuse: Building on his bipartisan work in the Senate, Obama will give the Treasury Department the tools it needs to stop the abuse of tax shelters and offshore tax havens and help close the $350 billion tax gap between taxes owed and taxes paid.

* Close Special Interest Corporate Loopholes: Obama will level the playing field for all businesses by eliminating special-interest loopholes and deductions, such as those for the oil and gas industry.

That sounds a lot like what you are praising Warner for. It's a shame that you didn't take the time to educate yourself on Obama's views on the topic before stating something so polar opposite from the truth.


The difference between the two is you'd have to have a lot of faith that any reductions achieved in the BHO version weren't overcome by some magnitude by all the program packages he's also offering to implement at the same time. UHC, maintain SS solvent with current age and $ levels, and the prescription drug plan alone make the defense budget laughable, and then tacking on any of the other 180 something items he's promising.
 

Bowfinger

Lifer
Nov 17, 2002
15,776
392
126
Originally posted by: Vic
Originally posted by: blackangst1
We didnt have a surplus due to cutbacks in spending. The nation budget has not decreased from one year to the next since 1932.
Actually, that's not true. The federal budget did see year-over-year spending decreases in Truman's first term following WWII. Along with dramatic decreases in debt % of GDP, a trend which didn't reverse until Nixon. The last Republican President to balance the budget was Eisenhower. The last Democratic President to do so was Clinton.

And while it is true that Clinton never reduced spending year-over-year, he did increase spending at the slowest rate of any modern President.
It's also misleading to fixate on total government spending dollars since there are other variables in play, notably inflation, the size of the economy, and the number of Americans. The fact is that as a percentage of GDP, post-WWII federal spending peaked under Ronald Reagan, dropped substantially under Bill Clinton, and rose again under GWB. Reduced spending was very much a factor in the Clinton-era budget surpluses.
 

EagleKeeper

Discussion Club Moderator<br>Elite Member
Staff member
Oct 30, 2000
42,589
5
0
Originally posted by: Red Dawn
Originally posted by: blackangst1
Originally posted by: Atreus21
Originally posted by: Genx87

...

Those stimulus checks are just borrowing time. If they were serious about stimulating the economy. They would cut 50-100 billion in spending permantly so they wouldnt have to keep raising taxes or praying for super economic growth to overcome the deficits while borrowing out the ass.

I have an alternative theory.

If they were serious about stimulating the economy, the would've given the stimulus checks only to those at or below the poverty line, for the simple reason that they would immediately spend it.

Among the wealthy, most of the money will go either to pay off debts or simply sit in savings.

Why would you want to give tax money to someone who pays zero taxes?
In addition the wealthy did not receive any stimulus checks.
A large chunk of the self-employed middle class did not either along with many seniors

Plus the students got a double whammy. They did not get anything because they were a dependant and the parents did not get credit for the student because the kids were over age.

 

sactoking

Diamond Member
Sep 24, 2007
7,582
2,817
136
Originally posted by: SP33Demon
Originally posted by: sactoking
Originally posted by: SP33Demon
Originally posted by: ElFenix
Originally posted by: Bowfinger
Or, to be more accurate, taxing capital gains equitably with earned income will have a minuscule impact on a huge chunk of the middle class (wage earners) and a significant impact on the very wealthy.

because certainly the middle class doesn't have 401(k)s!
He didn't say that, he said that the wealthy will be affected > than middle class, which = correct.

Actually, that's probably incorrect. The wealthy have a lower incentive to realize their wealth for income. The 'middle class' has to realize a disproportionately higher % of wealth. Since capital gains only taxes REALIZED wealth, the 'wealthy' usually roll their gains back into additional wealth-generating vehicles while the 'middle class' does not.

This also ignores the fact that the 'wealthy' are better able to navigate the unnecessarily complex American tax laws than the 'middle class', which causes them to pay an even more disproportionately small % of wealth.

However, if you think that raising rates will even out the proportion, I have this friend in Nigeria who needs some help sending money to the US......
You are assuming that most middle class families sell their stocks/bonds more frequently than the wealthy, which is probably correct because obviously the middle class constitutes a much larger percentage of people in this country vice wealthy. However, the way CGT is supposed to work is that the net dollars contributed will be larger from the wealthy, so the CGT still works to a certain degree but yes the middle class pays more % wise. Hopefully Obama will correct this to include ALL wealth, including securities you are holding.

Yes, a higher percentage of wealthy vice middle class will undoubtedly make use of tax shelters moreso because: a) They can afford better advice and again, b) the middle class is proportionately much larger than the wealthy. Same numbers game with percent as above.

That is correct. I meant that CGT has a disproportionately large AFFECT on the 'middle class', even if their net tax contribution is lower than that of the 'wealthy'.
 

blackangst1

Lifer
Feb 23, 2005
22,902
2,359
126
Originally posted by: Bowfinger
Originally posted by: Vic
Originally posted by: blackangst1
We didnt have a surplus due to cutbacks in spending. The nation budget has not decreased from one year to the next since 1932.
Actually, that's not true. The federal budget did see year-over-year spending decreases in Truman's first term following WWII. Along with dramatic decreases in debt % of GDP, a trend which didn't reverse until Nixon. The last Republican President to balance the budget was Eisenhower. The last Democratic President to do so was Clinton.

And while it is true that Clinton never reduced spending year-over-year, he did increase spending at the slowest rate of any modern President.
It's also misleading to fixate on total government spending dollars since there are other variables in play, notably inflation, the size of the economy, and the number of Americans. The fact is that as a percentage of GDP, post-WWII federal spending peaked under Ronald Reagan, dropped substantially under Bill Clinton, and rose again under GWB. Reduced spending was very much a factor in the Clinton-era budget surpluses.

Fine. Then adjust for inflation.

There has been no reduction in federal spending overall since 1932.
 

blackangst1

Lifer
Feb 23, 2005
22,902
2,359
126

Originally posted by: Vic
Originally posted by: blackangst1
We didnt have a surplus due to cutbacks in spending. The nation budget has not decreased from one year to the next since 1932.
Actually, that's not true. The federal budget did see year-over-year spending decreases in Truman's first term following WWII. Along with dramatic decreases in debt % of GDP, a trend which didn't reverse until Nixon. The last Republican President to balance the budget was Eisenhower. The last Democratic President to do so was Clinton.

And while it is true that Clinton never reduced spending year-over-year, he did increase spending at the slowest rate of any modern President.

Uh Vic I know youre smarter than that. Presidents dont write or pass budgets, correct?

And who was in control of the congress during the balanced budgets?
 

Craig234

Lifer
May 1, 2006
38,548
350
126
Originally posted by: blackangst1

Presidents dont write or pass budgets, correct?

Incorrect. Presidents, obviously through their staff, write budgets and submit them to Congress for approval.

If you would bother to do any research at all into the facts you would see that the dominant influence on spending changes comes from the president, not Congress.

And who was in control of the congress during the balanced budgets?[/quote]

Different parties were in control of Congress during Clinton's presidency, during every year of which the deficit was reduced by a similarly proportional amount.

The same Republican congress that was in charge during Clinton's balanced budgets was in charge during years when Bush skyrocketed the deficits back up.
 

Bowfinger

Lifer
Nov 17, 2002
15,776
392
126
Originally posted by: blackangst1
Originally posted by: Bowfinger
Originally posted by: Vic
Originally posted by: blackangst1
We didnt have a surplus due to cutbacks in spending. The nation budget has not decreased from one year to the next since 1932.
Actually, that's not true. The federal budget did see year-over-year spending decreases in Truman's first term following WWII. Along with dramatic decreases in debt % of GDP, a trend which didn't reverse until Nixon. The last Republican President to balance the budget was Eisenhower. The last Democratic President to do so was Clinton.

And while it is true that Clinton never reduced spending year-over-year, he did increase spending at the slowest rate of any modern President.
It's also misleading to fixate on total government spending dollars since there are other variables in play, notably inflation, the size of the economy, and the number of Americans. The fact is that as a percentage of GDP, post-WWII federal spending peaked under Ronald Reagan, dropped substantially under Bill Clinton, and rose again under GWB. Reduced spending was very much a factor in the Clinton-era budget surpluses.
Fine. Then adjust for inflation.

There has been no reduction in federal spending overall since 1932.
Still misleading. I already pointed out there are other factors affecting total federal spending. Fixating on total dollars, even inflation-adjusted dollars, is a diversion from more meaningful metrics. You are playing semantics games to avoid acknowledging that federal spending during the Clinton years (with a Republican Congress, to be sure) was substantially less as a percentage of GDP than it was under Reagan.
 

sactoking

Diamond Member
Sep 24, 2007
7,582
2,817
136
Originally posted by: BoberFett
Originally posted by: sactoking
Income tax does not equal capital gains tax. Income tax is a tax on income. Capital gains tax is a tax on realized wealth.

Increasing CGT is stupid. That discourages saving, investing, and wealth building. That is the LAST thing we should be discouraging. That is made even more relevant since our benevolent government, no matter which party was "in control", has never proven to be able to allocate increased tax revenue to paying down debt. Instead, it has an almost-perfect history of allocating the new revenue to more unnecessary programs and expenditures. Increasing the CGT has all of the drawbacks of reduced savings AND all of the drawbacks of increased spending, with none of the benefits of increased revenue.

Wrong.

Capital gains are only realized when you sell an asset. There's no disincentive to invest. You'll still make more money investing one million dollars than you will by burying it in a coffee can out back. But if your investments net you millions of dollars, why shouldn't that all count as income? Why should a person whose hundred thousandth dollar is earned through the sweat of their brow be taxed at 35% while the person whose hundred thousandth dollar made through investing only be taxed at 15%?

Both earned $100K, but one is getting screwed.

There is plenty disincentive to invest. You have to remember, the money being invested and later subject to capital gains came from SOMEWHERE. At some point in time, it was earned income and subject to income taxes. Capital gains represents DOUBLE TAXATION on previously earned income. THAT is why capital gains need to be taxed at a lower rate.

If I give you $100,000, the gov't gets a chunk right off the top, say 25%. If you then invest the remaining $75,000 the investment income is taxed at another 15%. If you up that percentage to the income level (25%), you will be less likely to invest the $75,000 than you would be at 15%. Don't forget too that historically CGT rates were ABOVE the income tax rates for all but the highest payors.

We HAVE to give a break to CGT or we stagnate the influx of capital in the country. I believe that most economists (or anyone who's taken an intro Macro course) would concur that capital investment is probably the single most important aspect of an economy.
 

blackangst1

Lifer
Feb 23, 2005
22,902
2,359
126
Originally posted by: Craig234
Originally posted by: blackangst1

Presidents dont write or pass budgets, correct?

Incorrect. Presidents, obviously through their staff, write budgets and submit them to Congress for approval.

If you would bother to do any research at all into the facts you would see that the dominant influence on spending changes comes from the president, not Congress.

And who was in control of the congress during the balanced budgets?

Different parties were in control of Congress during Clinton's presidency, during every year of which the deficit was reduced by a similarly proportional amount.

The same Republican congress that was in charge during Clinton's balanced budgets was in charge during years when Bush skyrocketed the deficits back up.[/quote]

Technically incorrect, but realistically correct. The POTUS submits "recommendations", at which point the budget is framed (or not) and appropriations bills are added. Youre arguing semantics.
 

brencat

Platinum Member
Feb 26, 2007
2,170
3
76
Originally posted by: sactoking
There is plenty disincentive to invest. You have to remember, the money being invested and later subject to capital gains came from SOMEWHERE. At some point in time, it was earned income and subject to income taxes. Capital gains represents DOUBLE TAXATION on previously earned income. THAT is why capital gains need to be taxed at a lower rate.

We HAVE to give a break to CGT or we stagnate the influx of capital in the country. I believe that most economists (or anyone who's taken an intro Macro course) would concur that capital investment is probably the single most important aspect of an economy.

+1

Exactly right, again.
 

ElFenix

Elite Member
Super Moderator
Mar 20, 2000
102,357
8,446
126
Originally posted by: dmcowen674
Originally posted by: Vic
No one is talking about a sudden pull-out that would destabilize the region, but thanks for the straw man.

I am.

i think a lot of people who will most likely be voting for obama would probably be sorely disappointed at the size of the 'immediate pull out' that would actually happen.
 

Craig234

Lifer
May 1, 2006
38,548
350
126
Originally posted by: sactoking

There is plenty disincentive to invest. You have to remember, the money being invested and later subject to capital gains came from SOMEWHERE. At some point in time, it was earned income and subject to income taxes. Capital gains represents DOUBLE TAXATION on previously earned income. THAT is why capital gains need to be taxed at a lower rate.

This is one of my favorite fallacies.

You know, the money being paid in salaries subject to income tax came from SOMEWHERE, too. At some point in time, it was previously taxed as income or somehow, and again before that. Say you pay tax on income, and then buy an item. The business then pays taxes on the profits, and pays some of that money out to its workers, who pay tax on it as income, and then buy an item. That's how taxes work. You don't go back to the day the cash was printed and find the first one tax event and forever after, it's tax-free cash.

The taxable portion of capital gains is the GAIN - the principle invested is not taxed, and the gain has never been taxed since it was paid to you, just like salary.

However, the capital gain has one huge advantage OVER salary. You can let the capital gains accumulate and get the benefit of pre-tax accumulation for years and decades, which is a huge benefit while the government waits for any tax revenue form it, while salary tax has to be paid the following year, period.
 

Craig234

Lifer
May 1, 2006
38,548
350
126
Originally posted by: blackangst1
Originally posted by: Craig234
Originally posted by: blackangst1

Presidents dont write or pass budgets, correct?

Incorrect. Presidents, obviously through their staff, write budgets and submit them to Congress for approval.

If you would bother to do any research at all into the facts you would see that the dominant influence on spending changes comes from the president, not Congress.

And who was in control of the congress during the balanced budgets?

Different parties were in control of Congress during Clinton's presidency, during every year of which the deficit was reduced by a similarly proportional amount.

The same Republican congress that was in charge during Clinton's balanced budgets was in charge during years when Bush skyrocketed the deficits back up.

Technically incorrect, but realistically correct. The POTUS submits "recommendations", at which point the budget is framed (or not) and appropriations bills are added. Youre arguing semantics.[/quote]

First, on the 'technicality' issue, no, the administration submits *a proposed budget*. If you call that 'recommendations', it's a pointlessly different word, not a correction.

Second, I'm not arguing semantics, you are as I just showed. I'm arguing the main topic of discussion in our exchange - whether the Congress or the President has the greatest influence on the budget. You can say all you like that Congress in theory can pass any budget they want (and override a veto), but practically, the president clearly has the dominant influence. You still haven't done that very basic research I asked you to, obviously, and it shows.
 

ElFenix

Elite Member
Super Moderator
Mar 20, 2000
102,357
8,446
126
Originally posted by: sactoking

There is plenty disincentive to invest. You have to remember, the money being invested and later subject to capital gains came from SOMEWHERE. At some point in time, it was earned income and subject to income taxes. Capital gains represents DOUBLE TAXATION on previously earned income. THAT is why capital gains need to be taxed at a lower rate.

uh, no, you subtract your basis when calculating your gain. of course, some of your 'gain' represents inflation, and that would be double taxed (could be substantial depending on the rate of return vs. inflation).

the double tax comes from corporate profits, which are taxed first at the corporation and then again when either distributed to shareholders in the form of a dividend or (if not paid out) when realized by the shareholder who sells a share, the value of which has gone up because the corporation has more capital.
 

Bowfinger

Lifer
Nov 17, 2002
15,776
392
126
Originally posted by: brencat
Originally posted by: sactoking
There is plenty disincentive to invest. You have to remember, the money being invested and later subject to capital gains came from SOMEWHERE. At some point in time, it was earned income and subject to income taxes. Capital gains represents DOUBLE TAXATION on previously earned income. THAT is why capital gains need to be taxed at a lower rate.

We HAVE to give a break to CGT or we stagnate the influx of capital in the country. I believe that most economists (or anyone who's taken an intro Macro course) would concur that capital investment is probably the single most important aspect of an economy.

+1

Exactly right, again.
Not really. That's the dogma, but I've never seen anyone support it with actual data, at least not data based on the kinds of rates that are on the table in the U.S. Until you can show there is a lack of investment capital available, I think that talking point is just another appeal to emotion. The fact is that people with extra money need to put it somewhere. In general, they will put it in places that give them the highest return (given individual tolerance for risk and requirements for liquidity). Increasing capital gains tax rates doesn't significantly discourage investment until there are other, more rewarding uses for money.
 

Corbett

Diamond Member
Jun 8, 2005
3,074
0
76
Originally posted by: LegendKiller
Originally posted by: Corbett
Originally posted by: Carbo
Obama: Raise Taxes, Penalize Business

This is the exact kind of policy that put Michigan into the worst economy in all 50 states.

No, being a one-trick pony put Michigan into the worst economy in all 50 states. Nice strawman though.

Michigan is not a one-trick-pony.
 

BoberFett

Lifer
Oct 9, 1999
37,562
9
81
Originally posted by: sactoking
Originally posted by: BoberFett
Originally posted by: sactoking
Income tax does not equal capital gains tax. Income tax is a tax on income. Capital gains tax is a tax on realized wealth.

Increasing CGT is stupid. That discourages saving, investing, and wealth building. That is the LAST thing we should be discouraging. That is made even more relevant since our benevolent government, no matter which party was "in control", has never proven to be able to allocate increased tax revenue to paying down debt. Instead, it has an almost-perfect history of allocating the new revenue to more unnecessary programs and expenditures. Increasing the CGT has all of the drawbacks of reduced savings AND all of the drawbacks of increased spending, with none of the benefits of increased revenue.

Wrong.

Capital gains are only realized when you sell an asset. There's no disincentive to invest. You'll still make more money investing one million dollars than you will by burying it in a coffee can out back. But if your investments net you millions of dollars, why shouldn't that all count as income? Why should a person whose hundred thousandth dollar is earned through the sweat of their brow be taxed at 35% while the person whose hundred thousandth dollar made through investing only be taxed at 15%?

Both earned $100K, but one is getting screwed.

There is plenty disincentive to invest. You have to remember, the money being invested and later subject to capital gains came from SOMEWHERE. At some point in time, it was earned income and subject to income taxes. Capital gains represents DOUBLE TAXATION on previously earned income. THAT is why capital gains need to be taxed at a lower rate.

If I give you $100,000, the gov't gets a chunk right off the top, say 25%. If you then invest the remaining $75,000 the investment income is taxed at another 15%. If you up that percentage to the income level (25%), you will be less likely to invest the $75,000 than you would be at 15%. Don't forget too that historically CGT rates were ABOVE the income tax rates for all but the highest payors.

We HAVE to give a break to CGT or we stagnate the influx of capital in the country. I believe that most economists (or anyone who's taken an intro Macro course) would concur that capital investment is probably the single most important aspect of an economy.

If I earn $100,000 the government gets a chunk of the top. I spend the rest of it feeding, clothing, and sheltering my family so that I can go back the next year and earn another $100,000. They're double taxing me on that first year's income!

Don't be so dense. There's no double taxation going on. The original $100,000 is never taxed again. Only the amount over the original $100,000. That's why it's called capital GAINS.

And if you think having foreign investors buy up everything of value here while the companies here outsource all of production to third world countries, I've got a bridge to sell you. It's a great investment...