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Simple way to end inequality is to raise taxes on investment income

By tovarichpeter follow tovarichpeter   2013 Sep 18, 11:38am 1,897 views   12 comments   watch   nsfw   quote   share    


As real wage growth slowed down for the vast majority of Americans, the richest households not only earned more but also saw higher gains from the stock market, in which they were the majority stakeholders.


1   MershedPerturders   ignore (1)   2013 Sep 18, 2:03pm     ↓ dislike (1)   quote   flag      

its called Capital Gains tax.

2   curious2   ignore (0)   2013 Sep 18, 3:22pm     ↓ dislike (0)   quote   flag      

The history of income taxation has seesawed with who's up and who's down, and never any regard for equality. We have different rates for investment income (capital gains and dividends), ordinary income (wages etc.), and inheritance. We have different exclusions for each category, e.g. excluding up to $500k of gains on a primary residence, and excluding most farms from estate tax. There are even rules to re-characterize income from one category into another, e.g. gains on bonds. Life would be a lot simpler if all forms of taxable income were taxed at the same rates, but the tax code and its administration are kept deliberately complicated because of the resulting opportunities for the various patronage networks. For example, Intuit and former IRS workers lobbied against free electronic filing, because Intuit and accountants who used to work for the IRS make a lot of money off the current system. Free electronic filing would have saved the IRS $, but the people who receive that revenue would count its loss as a problem. Each faction delivers tax cuts to its own constituents at the expense of the other faction, and years ago cap gains were taxed higher than wage income; the reversal shows you who's been up and who's been down. Neither faction seems at all interested in an equal tax system, because that wouldn't be a "win" for either side. Each faction must deliver a "win" for its constituents and deal a loss to the other. Somehow, Pat Robertson gets his deluded followers to believe that they're "winning" when he gets a tax cut.

3   curious2   ignore (0)   2013 Sep 18, 3:59pm     ↓ dislike (0)   quote   flag      

sbh says

I just don't want it to be so hard for the young to save and then invest.

I agree, and I think the young are hit on both fronts by QE and ZIRP. With ZIRP, banks don't even need customers, and the return on savings is below inflation. With QE, asset prices are inflated so high that it has become impossible for the young to buy low. Asset prices include housing, of course, which is a reason why so many young people are still living with their parents instead of forming households, and that has reduced the birth rate also. As for the tax rates, the Constitution authorizes the taxation of income, not capital, though the capital gains tax does blur the line especially in the context of inflation. It might be reasonable to adjust capital gains for inflation, for example, taxing only real gains (and real interest). If you combined that with the same graduated rate scale as applied to ordinary income, then Romney would pay 40% on his massive "carried interest" income while a young "buy and hold" investor shouldn't have any taxable gains and even if he insists on trading his gains would be small and thus the tax rate would be low.

4   curious2   ignore (0)   2013 Sep 18, 4:38pm     ↓ dislike (0)   quote   flag      

sbh says

would it matter to them such that they would do it?

That's a good question, and I think the millenials face a different economy from the boomers. At least in the SF Bay area, it's a lottery economy, or a Facebook economy, where M-Zuck and a few others make billions while the majority can't afford even a place to live. One might look for analogs in nature, e.g. sperm cells, one succeeds while millions don't. I use the lottery economy metaphor after some fascinating observations about the role of luck: just a few years ago, even the brilliant Larry and Sergei were willing to sell 100% of GOOG for $1 million to a VC who thought the price too high and refused to buy.

5   swebb   ignore (2)   2013 Sep 18, 10:51pm     ↓ dislike (0)   quote   flag      

sbh says

While I'm all for raising taxes on the mega-rich "job creators" I still hold out against structuring capital gains taxes in such a way that it impedes the young or the lower middle class from focusing on capital growth.

IRAs and 401Ks address this concern to a large extent. Capital gains taxes could be 50% and I wouldn't pay any taxes on capital gains since my investments are all in tax advantaged accounts...

6   freak80   ignore (4)   2013 Sep 18, 11:58pm     ↓ dislike (0)   quote   flag      

donjumpsuit says

I also heard that taxing investment income would hurt job growth. Can anyone confirm that?

Fox News can confirm that.

7   dublin hillz   ignore (0)   2013 Sep 19, 2:12am     ↓ dislike (1)   quote   flag      

sbh says

swebb says

IRAs and 401Ks address this concern to a large extent. Capital gains taxes could be 50% and I wouldn't pay any taxes on capital gains since my investments are all in tax advantaged accounts...

Tax deferred IRAs are miraculous if given proper devotion. I remember back in the late 70s choosing to fund mine over pooling money with some roomies to improve an old farmhouse we had collectively purchased. One of us...the smartest one...said she'd rather "have her own money" rather than put it in a tax deferral. Oh well: to each her own. If I were a young millennial I would make devotion to a Roth IRA. Pure, brilliant, relentless, golden.

I agree - one of the best moves that someone can do is to dollar cost average into the Roth IRA - (currently would be $458 per month). If someone can afford it and executes it, they have a shot to do really well for themselves when they retire while limiting the downside risk that comes with putting in $5500 all at once.

8   Tenpoundbass   ignore (14)   2013 Sep 19, 2:15am     ↓ dislike (1)   quote   flag      

tovarichpeter says

Simple way to end inequality is to raise taxes on investment income

But what would that do for you and me?
That would only mean, no hope for you and no hope for me.
If you're poor, then damn it you'll damn well stay poor, God forbid you come into some luck that paid off for you. The left will want to tax to them point, you'll owe them more money than you came into, should you have a wind fall.

You Clowns keep squawking about income inequality, but I haven't heard one reasonable idea to promote the little guy. Instead you're hell bent on closing off the paths to success, so we'll all be a Nation of piss poor failures.

It makes no fucking sense at all, not one damn bit.

I'd like to hear more about rules, and hard tough regulations that are designed to keep big companies in check, through fair business practices, and not regulations that are designed to out spend small upstarts and competition so much to the point, that it prohibits them even competing, and large businesses that can just chalk it up to the cost of doing business, in a rigged game of "you can't afford to play.". That is the current model of all regulations coming out of Washington, they are designed to oppress small businesses growing to success.

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