Stop Coddling the Super-Rich

[HVC]

You are a bunch of envious socialists.

If he has a gazillion dollars of income, it means he pays 15% of gazillion as tax. While poor people pay 15% of their meager income. Everyone participates equally. I know the "rich has more to spare", but that's the road on which you can eventually arrive to the "omg he is not poor! the bastard! where did he get it?!!!!!" society, which is NOT fun to live in, trust me.

His point is that poor people pay 40%.

You are wrong. His point is that the middle class pays 40%, not the poor. Which is worse.

Middle pays 40, poor pay 25, and rich pay 15. it's a weird scale

What's teh history of capital gains tax? I know canada changes the rate once in a while. what's the theory of paying a lower rate on it? to try to lesson "double taxing" (ie you paid income tax on the original amount received, and then invested that money), or jsut rich peopel making the rules?

[Ed Anger]

I know with my 35% rate, I take a swim in my money bin very day.

[dps]

Raise some taxes already, really. Christ.

If you read the article, you realize that the real culprit isn't that the tax rates need to be raised, but that there are too many tax breaks available to the super-rich.  Actually, there are probably too many tax breaks available to those who aren't super-rich, too "cough" morgage deduction "cough".  You don't have to go to a flat tax to solve a lot of these problems--you can keep progressive tax rates but simply do away with most deductions and exemptions--ideally, I'd like to see them do away with all deductions and exemptions except each taxpayer's personal exemption.  And while I think that captial gains should be handled seperately from ordinary income, I think that the rules should be tightened up so that only actual investments in real businesses count as capital gains.  I don't know how much tax revenue could be raised by the kinds of reforms I'm talking about, but if the very wealthy are only paying around 15% of their income in income taxes, and the top tax rate is 35% (not sure if that's right, but it's in that neighborhood, IIRC), then eliminating all those tax breaks would logically result in an increase in revenue at least equal to raising the top rate from 35% to 55%.  And without the kinds of reforms I'm suggesting, it's not clear that raising the top rate to 99% would bring in much additional revenue, if the wealthy can simply shift more of their income into exempt sources and vairous tax breaks.

[dps]

What's teh history of capital gains tax? I know canada changes the rate once in a while. what's the theory of paying a lower rate on it? to try to lesson "double taxing" (ie you paid income tax on the original amount received, and then invested that money), or jsut rich peopel making the rules?

Don't know about the history of it, but the theory is that taxing captial gains at a lower rate encourages investment.  I'm not sure that I buy it, but I'm willing to accept the theory, if the tax law were written so that it encourages actual investments--f.e., building a new factory or expanding an existing one, rather than just buying and selling paper.

[Berkut]

Raise some taxes already, really. Christ.

If you read the article, you realize that the real culprit isn't that the tax rates need to be raised, but that there are too many tax breaks available to the super-rich.  Actually, there are probably too many tax breaks available to those who aren't super-rich, too "cough" morgage deduction "cough".  You don't have to go to a flat tax to solve a lot of these problems--you can keep progressive tax rates but simply do away with most deductions and exemptions--ideally, I'd like to see them do away with all deductions and exemptions except each taxpayer's personal exemption.  And while I think that captial gains should be handled seperately from ordinary income, I think that the rules should be tightened up so that only actual investments in real businesses count as capital gains.  I don't know how much tax revenue could be raised by the kinds of reforms I'm talking about, but if the very wealthy are only paying around 15% of their income in income taxes, and the top tax rate is 35% (not sure if that's right, but it's in that neighborhood, IIRC), then eliminating all those tax breaks would logically result in an increase in revenue at least equal to raising the top rate from 35% to 55%.  And without the kinds of reforms I'm suggesting, it's not clear that raising the top rate to 99% would bring in much additional revenue, if the wealthy can simply shift more of their income into exempt sources and vairous tax breaks.

Honestly, I don't care if they go about raising rates, or simply eliminating deductions, or whatever.

But tax revenues need to increase across the board. I certainly favor reform rather than rate increases, as I think we are long overdue for a overhaul of the taxation system in general, but there is no doubt that right now the system grossly favors the wealthy. And not just the tax system, but the economic system in general is out of whack and needs to be addressed, as far as getting the economic gains more equitably distributed across income stratas.

[HVC]

What's teh history of capital gains tax? I know canada changes the rate once in a while. what's the theory of paying a lower rate on it? to try to lesson "double taxing" (ie you paid income tax on the original amount received, and then invested that money), or jsut rich peopel making the rules?

Don't know about the history of it, but the theory is that taxing captial gains at a lower rate encourages investment.  I'm not sure that I buy it, but I'm willing to accept the theory, if the tax law were written so that it encourages actual investments--f.e., building a new factory or expanding an existing one, rather than just buying and selling paper.

i can see that for small investors. eases the risk (save it an keep it, or risk it and lose it) but if that's the case there should really be a cap.

[Scipio]

That whole "you can't advocate higher taxation if you haven't voluntarily paid more in taxes" line is dumb beyond belief.

I'm not saying he can't.  I'm asking why he hasn't.

[DGuller]

That whole "you can't advocate higher taxation if you haven't voluntarily paid more in taxes" line is dumb beyond belief.

I'm not saying he can't.  I'm asking why he hasn't.

The underlying fallacy is the same.

[Razgovory]

I wish people would coddle me.

[Slargos]

oh don't give me that crap. You are not rampantly cheating taxes because the risk-reward ratio is way off, not because you are a supreme race of people. After all, Wall Street isn't exactly in Zimbabwe, neither was it the government of Chad which presented false WMD evidences to the UN. So just cut it.

The higher taxes with the more complex tax laws, the more tax evasion you have. I am fine and well with citing Hungary as an example, because it is an extreme end of spectrum, and you can be sure that if you advocate of moving your country toward that end, I'll tell you how it may end.

There are a couple of reasons why there is not rampant cheating.  The major reason is that because most people generally don't cheat (too much anyway).  That's not tautological, that's just a cultural trait.  No police in the world can get people to comply with laws, if most people didn't have it in their mind to obey the laws in the first place. 

You are right about risk-reward ratio being different as well, but you seem to go straight to assuming that it's lack of reward that's an issue, when in fact the risk is what's driving it.  IRS is pretty good at cross-checking sums, and it's fearsome once they catch on to someone.  That is also a piece of governance that takes many decades to develop.

No. I didn't single out the lack of reward, altough there is certainly that. Still, you must realize it comes through quite arrogant to state that you have less tax crimes (altough I'd like to see statistics on that) because you are Americans, and you don't have it in your culture to steal from the state.

Or, rather, go ahead and make that argument, but then make sure to side with me on the "are gypos thieves by culture?" topics, or with Slargos on basically everything.

The fuck are you dragging me into this? 

[Razgovory]

Well you are a thief.

[Slargos]

Technically speaking, no I'm not. 

[crazy canuck]

What's teh history of capital gains tax? I know canada changes the rate once in a while. what's the theory of paying a lower rate on it? to try to lesson "double taxing" (ie you paid income tax on the original amount received, and then invested that money), or jsut rich peopel making the rules?

Don't know about the history of it, but the theory is that taxing captial gains at a lower rate encourages investment.  I'm not sure that I buy it, but I'm willing to accept the theory, if the tax law were written so that it encourages actual investments--f.e., building a new factory or expanding an existing one, rather than just buying and selling paper.

i can see that for small investors. eases the risk (save it an keep it, or risk it and lose it) but if that's the case there should really be a cap.

In Canada the first 500,000 irc was excempt from capital gains tax.  Personal residences have always been excempt and were not counted in that figure.  The 500,000 exemption was removed sometime in the early 90s as part of the push to put our finiancial house in order.  Given that the 90s became a boom period of investment I doubt very much that removing the exemption had any adverse effect.  As Buffet said, people will invest if they see a good deal whether or not the money they make from that investment is taxed.

[dps]

What's teh history of capital gains tax? I know canada changes the rate once in a while. what's the theory of paying a lower rate on it? to try to lesson "double taxing" (ie you paid income tax on the original amount received, and then invested that money), or jsut rich peopel making the rules?

Don't know about the history of it, but the theory is that taxing captial gains at a lower rate encourages investment.  I'm not sure that I buy it, but I'm willing to accept the theory, if the tax law were written so that it encourages actual investments--f.e., building a new factory or expanding an existing one, rather than just buying and selling paper.

i can see that for small investors. eases the risk (save it an keep it, or risk it and lose it) but if that's the case there should really be a cap.

In Canada the first 500,000 irc was excempt from capital gains tax.  Personal residences have always been excempt and were not counted in that figure.  The 500,000 exemption was removed sometime in the early 90s as part of the push to put our finiancial house in order.  Given that the 90s became a boom period of investment I doubt very much that removing the exemption had any adverse effect.  As Buffet said, people will invest if they see a good deal whether or not the money they make from that investment is taxed.

I tend to agree.  Return on investment is much more important than any tax considerations.  But as I said, I'm willing to see capital gains treated differently if they are actually derived from investing in something tangible, not somethen that exists only on paper.

[crazy canuck]

I tend to agree.  Return on investment is much more important than any tax considerations.  But as I said, I'm willing to see capital gains treated differently if they are actually derived from investing in something tangible, not somethen that exists only on paper.

Agreed, but there is a cautionary tale here as well.  There used to be a special scientific tax credit in Canada available to businesses developing new technologies - part of the government of the day's push to create more innovation within Canadian business.

Problem was a lot of the "businesses" claiming the tax credit were a complete sham.  The government eventually realized that the cost of the program in lost tax revenue didnt provide the kind innovative incentive they had hoped.  It really just created incentive for some very creative book keeping practices and some outright fraud and the program was ended.

It is hard to think of a solid set of rules to distinguish an investment derived from something "real" vs something that is not since all investments at some point - if you dig down deep enough - are based on something that started out as a tangeable asset.  These sorts of rules just create the kind of  accounting bonanza that the original policy is trying to avoid.

Imo its better to have a more simple set of rules that are hard to avoid and are easier to enforce.  That way you likely create less distortions in the market as well.