Taxes

[scottw]

Originally Posted by JohnnyD

It's not that people are blurring the distinction between "earned income" and "capital gains income", it's that people are commenting about paying a sub-15% tax rate on their income, regardless of how it is categorized.

Taxes are taxes, whether I write a check to the state of MA or to the IRS, just like income is income whether it was earned through dividends or a paycheck.

no difference, regardless of how it is categorized....interesting...


this should be fascinating, I'll let the numbers guys weigh in before I take a crack at that logic

[Jim in CT]

Originally Posted by JohnnyD

just like income is income whether it was earned through dividends or a paycheck.

Wrong.

Investing in a company (whether you are hoping for dividends or capital gains) involves RISK, LOTS OF RISK. We need to encourage investors to take on that risk, and the way you do that is to make the "reward" comparable to the risk.

Capital gains are the "cost" of making money by investing. Chapter 1 of any economics text will clearly state that when you increase the cost of something, the demand for that something (no matter what it is), goes down. You don't want to stifle the demand for investment returns, particularly in a recession.

Money earned through investing is very, very different than what you earn in a bi-weekly paycheck. I don't need to risk any of my personal assets in order to earn a paycheck. There are, in my opinion, valid reasons why capital gains are taxed at a rate lower than income.

Here's what gets me about all this...John Kerry is worth 10 times what Mitt Romney is worth, and Kerry's effective tax rate is a little lower than Romney's. Where was all this outrage when Kerry ran for President? Menaing, it's OK when rich liberals do this, but when conservatives do it, they are out to screw the middle class. It's bullsh*t.

[justplugit]

Originally Posted by scottw

The tax on capital gains directly affects investment decisions, the mobility and flow of risk capital... the ease or difficulty experienced by new ventures in obtaining capital, and thereby the strength and potential for growth in the economy.
John F. Kennedy


....

He had it right there for sure.
He understood Risk and made the right call on standing up to the
Russians in the Cuban Missel Crisis too, as scary as it was at the time.

[spence]

Actually, it looks like the UK is now using two rates for capital gains, 18% for lower income and 28% for the rest which would include anyone really making much money. They also allow for the first 5,300 pounds to be exempt from all capital gains.

So while still not income, it looks like the UK is taxing carried interest at a much higher rate than the US. According to your article this should result in the UK suffering some real economic damage...More specifically your article said:

In today’s global economy, countries have to compete for the capital they need to grow.
Raising tax rates on long-term capital gains of US partnerships would hang a “not
welcome here,” sign on our door.

Although, as usual reality has a counter opinion...

Global Financial Centres Index - Wikipedia, the free encyclopedia

-spence

[scottw]

Originally Posted by spence

Actually, it looks like the UK is now using two rates for capital gains, 18% for lower income and 28% for the rest which would include anyone really making much money. They also allow for the first 5,300 pounds to be exempt from all capital gains.

So while still not income, I thought you said it was income?it looks like the UK is taxing carried interest at a much higher rate than the US.

-spence

this is perfect...thanks for pointing it out

sooooo....

the problem...favourable tax rates on "carried interest" attracted political controversy....

the argument.....and since "income is income" it is unfair and "carried interest" should be taxed as earned income and not as capital gains

solution....raise the tax rate on All capital gains by 8%....I know there are exclusions for low earners, we have them too(some might call these "loopholes") instead of whacking earned interest as capital gains as we originally argued, we'll just whack all capital gains...it's more money...it's fairer...sort of...and probably "for the children"

solution?....carried interest continues to be treated as gains and not income

another problem....still not fair enough....need more money to fund the nanny state

solution....raise capital gains on high earners to 28% wow, that's even more than last time!!!

arrrrgggghhhhh...carried interest continues to be treated as gains and not income

and thank your lucky stars it wasn't worse....because...

"There had been speculation that CGT would be lifted to 40pc as the Liberal Democrats had promised before the election, or even 50pc in line with the top band of income tax.
The move was seen as a key victory for the Lib Dems." no doubt


Budget 2010: Capital gains tax rate increased to 28pc - Telegraph


this shows you that lib dems are pretty much the same wherever you go I imagine they'll get their 40,50 eventually...just keep pecking away

[Raven]

i'm taking them to the casino

i have a system

[spence]

Not taxed as income obviously.

What you still haven't answered is why profit without capital investment deserves to be taxed at a rate specified for capital gains.

This isn't about treating private equity managers differently, in fact the idea is to simplify things so they're treated the same.

-spence

[scottw]

Originally Posted by spence

Not taxed as income obviously.

What you still haven't answered is why profit without capital investment deserves to be taxed at a rate specified for capital gains.you tell me, it isn't/hasn't in the US, nor...as we just discussed, in the UK...must be a reason....right????

This isn't about treating private equity managers differently, in fact the idea is to simplify things so they're treated the same.what would you like to simplify?

-spence

what this is about is a simplistic argument claiming unfairness with no real basis....I have posted reasons as to why carried interest is and has historically been taxed as capital gains and why capital gains are different from earned income(can't believe it was necessary)...apparently the reasons are suffucient and proper to keep it(carried interest) categorized that way despite the rhetoric both here and abroad in a far more "fair" and leftist place ....I have no pony in this race, I don't care how they are taxed, it doesn't affect me, the issue that I have is the ginned up resentment(and you've displayed it in many of your comments...) based more on bitter sentiment than facts all in an effort to impose fairness to further feed the very big mouth of government and all of this takes the focus off of the real issue which is SPENDING!!!...

we've gone from...

it's not fair that millionaire Romney pays lower tax rate on his "income" than Joe the Butcher
to.....
income is income.......... no matter how it is derived
to....
"answer why profit without capital investment deserves to be taxed at a rate specified for capital gains"..... despite the fact that it isn't and hasn't been in any example we can find

I'm cool with one tax rate for everything, everyone...something tells me that the "lib dems" would still spend every waking hour(and probably in their dreams too) trying to figure out how to push it higher and higher and higher

Britain's most talent workers flee to avoid high tax rates - Telegraph

Nick Clegg: 'we'll stick to our guns on mansion tax'

Nick Clegg vowed that the Liberal Democrats will “stick to our guns” on a mansion tax, insisting owners of £2m homes should be made to pay more. OCCUPY ENGLAND

The Deputy Prime Minister attacked “eye wateringly lucrative assets so often hoarded at the top” calling for the Coalition to do more tax “serious, unearned wealth”. they just start drooling don't they?

"They need help quickly as they're facing high bills, they've had to face very high energy and electricity bills, and I think the Government should - we already are - but we should try and do more for exactly these people," he said. sign em' up!

A source close to the Lib Dem leader said: “Nick wants to call time on a tax system that has passed its sell-by date. Between now and the Budget, Nick and Danny [Alexander, the Chief Secretary to the Treasury] will be arguing for faster tax cuts for hard-working families, paid for by increasing the amount paid by the richest. quit fiddlin' Nick...just take it all!!!


The Office for National Statistics announced yesterday that gross domestic product had fallen by 0.2 per cent during the final three months of 2011. If the economy fails to grow in the first three months of 2012, Britain will have slipped into a double-dip recession for the first time since the 1970s. has Obama been "focusing like a lazer" on the British economy?

Yesterday, David Cameron called the latest figures “disappointing”. he should have Obama do his figures
But tax increases for the wealthy are controversial. The 50p top rate of income tax, the reduction of which the Lib Dems have opposed, has been blamed for making Britain unattractive to wealth creators. no way??!!

ÞThe Coalition’s new pension scheme, under which firms would automatically enrol every employee into a company pension plan and contribute, is to be delayed by two years, ministers admitted yesterday.just "deem it passed" and give Obama Care type waivers to all of your buddies and screw everyone else, it's working just great here in the Colonies Steve Webb, the pensions minister, said the scheme would not be fully phased in until October 2018. this sounds great...I like "scheme"
Nick Clegg: 'we'll stick to our guns on mansion tax' - Telegraph