Increase Ordinary Income Tax Rates or................

Should we really increase Ordinary Income Tax Rates? Ordinary Income is earned. I believe we should tax Capital Gains and dividends progressively as we tax Ordinary Income. By this I propose raising the Capital Gains Tax to 30% for catpital gains income between $500,000.00 and 1Million and 35% for income over 1Million and I believe capital gains income $250,000 to under $500,00.00 taxed at 25% and under $250,000.00 taxed at 10%(as the majority of these income earners claim gains on the sale of their homes and rarely have gains other than sale of home above $500k. These individuals normally represent the middle-class)

Any thoughts?

 

I am amazed that nobody has an opinion on this topic. When you actually are paid a wage for performing a job/service, you should be taxed fairly and IMO equally. In other words I believe we should all pay the same tax rate on our "Ordinary Income earned". The reason that the Millionaires and Billionaires that Obama and Democrats speak about pay a lower effective tax on their earnings is because the majority of their earnings are "Capital Gains Income" and not "Ordinary Income". So if Obama and the Democrats really want Millionaires and Billionaires to pay an equal amount of taxes on their earnings as those of us that only pay taxes on our "ordinary income" then they would have to increase the tax rate on Capital Gains of 1Million+. But Obama and Democrats don't only want to raise Ordinary Income Taxes on "Millionaires and Billionaire", they want to include couples filing jointly with Adjusted Gross Incomes over $250,000.00. I hardly consider these couples to be Millionaires and Billionaires as if each earns $150,000.00/yr their taxes will increase regardless of the number of dependants and those they are paying college tuition for or paying health insurance premiums for if under 27 years old; the will pay a higher tax rate than a single person that earns under $200,000.00 and has no dependants. Even with the tax credit, which Bush put into place, it is still not fair and equal. And, those families earning under $500,000.00 with say 4 dependants are not likely to benefit from the same tax breaks as Millionaires or are they likely able to shift their income to purchase investments and live off of their "Capital Gains". Most people only see a capital gain on their real estate, such as their home if they sell and make a profit and do not buy another home. Most ordinary wage earners have few investments in stocks or real-estate(other than their primary residence) other than those in their Retirement accounts and those earnings are not taxed until they retire and begin to withdrawal the money and then it is not taxed at the capital gains rates, that is unfair IMO

 

Government doesn't need more money as far as I am concerned. They need to learn how to not spend so god (*)(*)(*)(*) much of it first.

 

You have not explained WHY the federal government needs to raise taxes on anyone/anything??

IMO maximize the cash in the private sector (people's/business's hands) and minimize government.

There is a cause and effect in the application of taxation. Taxation is usually used to control; like a carbon tax is meant to control carbon emissions. If you arbitrarily increase capital gains taxes, do you actually believe this is a positive action to take?

Lastly, it is stupid to talk about increasing federal taxation until the federal government can prove it is fiscally responsible...

 

There is a big problem when the capital gains tax is lower than the ordinary income tax and it is a problem that directly effects job growth in the US economy.

When the capital gains tax is lower than the income tax people with money are encouraged to gain all their income from capital gains, i.e. from speculating in the equity and commodity markets. This encouragment is created by lowering the risk of speculative gambling in the markets relative to direct investment whose gains are subject to ordinary income tax.

The formula is pretty simple. A high capital gains tax requires outsized gains from market investments to offset losses and taxes thus providing encouragement to make direct investment in business, where gains are taxed at a lower rate and investment can bring even more favorable tax treatment. It is more work for the investor as management, but creates more jobs and wider economic growth.

If you are at all concerned with the economic future of the US it is quite bleak a long as the current tax regime continues but will accelerate appreciably if the republicans get their way and remove the capital gains tax completely because then there will be absolutely no reason for any business to do anything but sell off all their assets and invest all their money in the markets.

 

Greatly increasing the capital gains tax will be much more of a burden on lower and middle class people than on the wealthy. Investment money is going to find it's way to the best ROI...if you make US investment less interesting, the money just goes off-shore or wherever it will get the best ROI. ~80 million Americans own stocks and ~100 million Americans own property...both applicable to capital gains taxes...

 

All those things you mention in the first paragraph are reasons not to raise taxes at this time. This year there is a $1.3 trillion deficit, and in order to balance this, taking this amount of money from the private sector will get all politicians voted out of office.

You can dwell on austerity or stimulus or debt and any word but at the end of the year, and particularly year after year after year, the USA cannot keep spending $3.5 trillion while taking in only $2.2 trillion. We have a $15 trillion GDP which is yielding $2.2 trillion in taxes; at the current tax structures the GDP will need to increase to $24 trillion in order to balance the budget.

IMO Obama and others have created a $20 trillion monster which is simply too big to deal with. If all 150 million taxpayers paid an additional $5000 per year in taxes, it will take about 27 years to pay down $20 trillion in debt. If it's more like $1000 per year it will take 135 years! Most everyone is screaming bloody murder about the potential 'fiscal cliff' yet this is only about $1000 per year per person.

My point is why pay another penny of taxes if the government will just spend that penny? If you got all Americans to chip in an extra $1 trillion in taxes, the government would just spend it. I'd like to see lots of taxes increased with spending reductions and caps...

 

That is exceedingly misleading. Sure, 80 million own stock but 5 million own 80% of it and the capital gains that the vast majority of middle class people realize are tax free anyway since they are in retirement accounts. Property gains come with huge exemptions, very few people pay taxes on that, and they are the most wealthy.

Another argument for the past few decades has been that taxing capital gains will cause the investor class to flee and deprive the government of their much needed tax revenues. Well, that has done nothing but institute a global race to the bottom in capital gains taxes which has resulted in vastly reduced revenue from capital gains worldwide. That argument has proven to be exactly wrong.

Yet a third argument is that high taxes on capital gains remove incentives to invest in business and job growth, which is debunked by my previous post.

You will have to do better to make an argument that low capital gains taxes are a good idea.

 

Given the fact that tax revenues are proporately at 60 year lows and $800 billion lower than in 2000, we should really do both. Repeal the Bush tax cuts, and tax investments at the same rate as earned income (like Reagan did it).

It's something you cannot conclusively prove, but IMO it's not just coincidence we've seen the financial sector become such a big part of the economy and we've seen two massive, and disasterous, asset bubbles in the decade since investment taxes were slashed to less than half the rate of earned income.

We don't need to reward more capital and investment. We need to encourage and reward production and earning.

 

Given the fact that tax revenues are proporately at 60 year lows and $800 billion lower than in 2000, we should really do both. Repeal the Bush tax cuts, and tax investments at the same rate as earned income (like Reagan did it).

It's something you cannot conclusively prove, but IMO it's not just coincidence we've seen the financial sector become such a big part of the economy and we've seen two massive, and disasterous, asset bubbles in the decade since investment taxes were slashed to less than half the rate of earned income.

We don't need to reward more capital and investment. We need to encourage and reward production and earning.

 

In bold above...you are NEVER going to find happiness when you remain jealous of others, when you constantly complain about what others have that apparently you can't obtain on your own merits. Who gives a rip what others have????? How about worrying about yourself...a novel idea! No matter your jealousies, the FACT remains that tens of millions of Americans own stock and are subject to capital gains taxes. Use some sense; who is going to feel the capital gains tax increase more...the 75 million Americans who live pay-check to pay-check or the 5 million wealthy ones? Besides, why punish a tool which encourages investment? Why wouldn't you lower capital gains taxes to encourage investment...oh I forgot...you are jealous of others and cannot stand to have them earn more even if you earn more.

You do what you wish with your money. My money is going where my net ROI is the best considering risks. What you ignore is that all of us today live in a global economy; we can live anywhere we wish, start a business anywhere we wish, invest money anywhere we wish, stash cash etc. anywhere we wish. Investing is no longer local...

 

Ah, the old "jealousy" card we always get from the greedy when they try to defend the "trickle down" policies that have funnelled the nation's wealth to theml The question is whose money it should be in the first place and why after 30 years of trickle down make the richest richer policies so much more of the nation's wealth and income are going to so very few at the expense of so many.

 

Well I am pretty ignorant on the subject but a person that has his money invested in funds by his company and has his money put in the account before taxes are taken out has to pay the full income tax rate when he cashes in. So he does not benefit from capital gains taxes. In fact, he pays an even higher rate because he is taxed on the whole bundle.

So once more the little guy carries the load.

 

That is true for IRAs/401ks, where most little guys have whatever meager savings they might possess. Withdrawals are taxed as regular income, and don't get the special privileged super low 15% rate.

But to be fair, you are not taxed on income you use to fund the 401k, and the principle grows tax free. The latter is not quite as big of a deal as people might suppose, because capital gains (growth in value of the asset) are not taxed either until they are realized. And you cannot easily take the money out until you hit age 59 1/2.

So you save a little putting it in, but pay out more when you take it out. All in all IMO not quite the great deal that the salesman will tell you. I putsome money in the 401k mostly because it has certain legal benefits (i.e. creditors cannot reach it).

 

If a 401K had the benefit of being able to deduct the losses when the losers are sold it would be a better deal.

I mean if I had a large portfolio under my own management I would sell the losers to give myself a break in other areas and reduce my total tax burden.
I could either spend the money or re-invest it in better quality stock.

But I like real estate...and that is where my little bit of extra goes...in land or animals.

 

But don't get me wrong...a 401K is a good thing to have.

 

What a stupid post.

Do you violate the rules when you call yourself stupid ?

Do I need to report mysef?

 

I don't understand the concept of discriminatory taxes. Capital gains, dividends, patent royalties, copyright royalties, rental income, real estate profit, payroll income, etc. should all be taxed at the same progressive rate. Just because Bernanke is manipulating the interest rate doesn't mean that the loyal flock should get extra gubment cheese for doing as they were ordered. A critical assessment of stocks would reveal that a very small percentage actually goes towards business investment. A bank investment (i.e. certificate of deposit) can be used to fund a new business venture. The interest discrimination imposed by Bernanke should be removed and the USA should fall into the standard of living that it deserves (i.e. low - like Mexico).

 

We should do neither. We should spend less. Much much much less.

 

Most lower and middle class people will not be affected by higher capital gains tax because most stock and mutual fund investments are done through trust arrangements such as an IRA or 401k account.

It will affect higher income earners because now the other investment vehicles, annuities, munis, and other financial instruments will have an equal comparability to stocks and other capital assets. It even might affect more long term financial diecisions than short term financial decisoin making criteria.

 

Well...it is jealousy.

Trickle down cannot be disputed since money spent trickles in every direction and energizes the economy.

BTW; the 'nation' does not own any 'income'. The entire private economy is open to every single person, and it is 100% the decision of every single person, to decide how they wish to be involved in the economy. Those who finish high school and avoid crime and work hard to excel, and those who seek bachelor and graduate degrees in career oriented curriculum's, and those who take the risks to start private business, are certainly going to be rewarded differently than those who choose the other end of the spectrum.

I would call it AUDACITY of those who believe others should pay for their failures! If you and others are so unhappy of your economic situations, then YOU and others need to do something about it...and this does not include begging government and others to pay your way...

 

On pre-tax investments, when they are cashed out, the person pays ordinary income tax on the pre-tax amount, and, capital gains on the gains amount.

This and all tax policy is not about the 'little guy' or the 'big guy'. These policies apply to all taxpayers as applicable...

 

Actually, Supply side economics has been disproven by the academia numerious times. It hasn't worked at all to the extent it the theory was intended to do.

But the reality is that increasing top marginal rates isn't about jealousy, it is about sound tax policy. Eliminating the Bush tax cuts and keeping the tax rates stable for at least five years is a better way of improving the structural deficit than broad based tax cuts that would decrease revenue, increase deficits, and will continue the downward trend of our debt ratings.

 

In bold above this is ridiculous! When you spend a single penny that penny energizes the economy...this cannot be debated! It makes no difference who is doing the spending; the aggregate spending energizes the economy! What is supply-side economics; basically lowering income taxes, capital gains taxes, government regulations...right? So you are saying that 'academics' believe the opposite, that it is beneficial for Americans if we increase income tax rates, increase capital gains rates, and apply more regulations...right? Doesn't logic tell you that if YOU have more cash in your pocket due to less taxation, etc. that you will spend more money? If you spend along with 200 million other Americans, doesn't this energize the economy? Conversely, again using some logic, if you have less cash in your pockets, obviously you will spend less, and the economy will do the opposite of energize; contraction.

Regarding the underlined above, those currently in the top income tax rates already pay 80% of income taxes, while you and others only pay 20%. Just how much do you expect others to pay; 85%...90%...100%? How is it reasonable for 20 million Americans to pay 80% of the taxes while 130 million Americans pay only 20% of the taxes? What happened to the novel idea of ALL AMERICANS paying their fair share? How can 100 million Americans fair share be 0% income taxes?

Lastly, there's only so much money in the system. IMHO I want to minimize government and maximize the economy, which means I want to keep more money in my pockets. What good does it do me to give more money to the government? What problem is going to be solved? At government's current spending levels, all American taxpayers on average owe about $19,000 per year in federal income taxes; are you paying this amount?