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Ksolem
Trad climber
Monrovia, California
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Splater, a few questions/comments...
1.) In relative terms I'm a small investor, and any money I have invested is money I earned and paid regular income tax on it at the time. So you think I should pay regular income tax again on money I earned from my investments? Why should I even put my money at risk when if I do get a return it's double taxed? As it is, I pay regular tax on what my IRA spins off.
2.) As you are saying, capital gains reset upon the death of the person who created them. If the person who inherits that money invests it (again, takes some risk) they pay cap gains on what they earn. If they spend it 10% (in much of L..A. County) is taxed over the counter. If they buy real estate they pay property taxes on that. The Government gets a good piece of it. Again I am not speaking as a billionaire, but as an investor who is trying to earn myself a secure retirement. When a wealthy person dies and leaves an estate to family or whatever it is taxed. And yes, the threshold for that tax is, as I recall, $4M. But keep this in mind. At today's interest rates - figure 3% for a senior who wants to be in a bulletproof product - a private citizen would have to have more than that much money securely invested to earn the equal of many public employees pension and benefits packages.
3. I get your point up until you advocate for taxing capital gains as regular income.
4. So rolling over money into another investment should be taxed? Your going to pay tax when you take your earnings, now you want to tax re-investing?
5. I'll come in with you on this one.
I see each one of these taxes you propose, except probably for #5, as punitive to people like myself. I don't like to be punished for earning a little money when, if you add it all up, my household pays out a substantial amount of our earnings in tax already. Enough is enough. I'll go so far as to say that I think it's immoral for a corrupt and monumentally wasteful government to continually invent new ways to raise taxes. It's called feeding the beast.
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Hubbard
climber
San Diego
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As I understand the system: The only protection capital has from being over-taxed or claimed outright by a government is to take profits and park them in a bank of another country. Call them offshore banks if you like but there are many small countries that operate almost exclusively as banking centers. As long as a tax rate remains high, capital will stay parked. This is the leverage capital has against government taxation. Companies all over the world do this. Republicans and Democrats do this in equal measure. When a tax-rate is lowered enough to be tolerable to capital it will then come home and be taxed at the lower rate and still have enough left over for investing in the core business or for stock buy-backs. Some of this is happening now in the United States. High tax rates just make capital run away and it always has and always will have places to run. People always talk about Switzerland but there are many others. They are usually small countries tucked in between large powerful countries. Look on a global map with this in mind and you will find them.
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Reilly
Mountain climber
The Other Monrovia- CA
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That ship left Switzerland long ago. Cayman Islands, Monaco, Fiji, Brunei, Seychelles, Malta,
Belize, Macau, Singapore; take yer pick. I wish most weren’t so hot and humid. I could
tolerate Monaco, I guess.
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Gary
Social climber
Desolation Basin, Calif.
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If the capitalists didn't want to pay taxes on their wealth they shouldn't have stolen it from us in the first place.
They can't have their cake and eat it too!
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Hubbard
climber
San Diego
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Reilly has the facts. Gary thinks business people are stealing from him. Business is willing to pay tax on capital because when the capital is back in the home country the business can make money by reinvesting. They might earn ten percent. When the money is in Singapore for example they might have to pay one percent to keep it there. The pressure of idle money is the other side of the coin for business. If a tax rate of 70 percent is imposed then losing one percent seems like nothing. If the tax rate is more reasonable then the risk to reward ratio is more palatable. Many business ventures go bankrupt. Business people take huge chances and suffer major stress to do so. It is all a form of gambling. Knuckleheads gamble on the baseball game or buy lottery tickets. No long term plan. Just win or lose today. Sharper people build wealth with a plan and the passage of chunks of time. A five year plan is a good place to start. Build a little credit so you can get a loan and buy a tractor. This is a start. Next, spend some more money to advertise your services. Business person is still losing money at this point and feeling the heat. No theft going on. Work hard every day. Show up on time, sober, and eventually the tide might turn in the favor of the business person. It is hard to do and that is why the reward favors those that take the risk. Honnold took his big chance and now he is getting the reward.
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Flip Flop
climber
Earth Planet, Universe
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The fact that producers pay tax on profits at each transaction and lazy, greedy capitalists don't pay fair tax on their transactions is class warfare. Putting capital before production is immoral.
"Labor was the first price, the original purchase - money that was paid for all things."
-Adam Smith
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Hubbard
climber
San Diego
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Flip Flop uses stereotypes. Some people are greedy and some are not. Bill Gates comes to mind and so does Honnold as examples of people who have developed a morality. Bill Gates spends a lot of money in Africa trying to eradicate disease. It is his money and he has the right to spend it outside of the home country. This is the power of capitalism where the person who was smart enough to amass a fortune gets the reward to do what they want with it. If all the money is taken by a government, it is spent only in ways that keep the people running that government in power. Countries like that are not the ones helping out overseas and far away. I just read about a wealthy capitalist who took his own land in the United States that he owned and he gave it to an Indian tribe. He had the choice to do what he wanted with his money. China just took Tibet. Do you think the Chinese government would ever just give it back? Richie rich in the United States with his or her McMansion is ugly but I the penniless rock climber don't begrudge the wealth. The McMansion needs to be worked on which creates nice jobs for average people to earn a little so they can buy lottery tickets. And the property tax paid every year to continue holding the white elephant is substantial. Nothing is perfect. Everybody pays one way or another. Fortune favors the bold.
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Gary
Social climber
Desolation Basin, Calif.
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Show up for work every day, work hard and you get laid off while the capitalist cashes out. Hubbard, how can you even think of backing people who live off the work of others.
Republican presidents know it's true.
It is not needed, nor fitting here that a general argument should be made in favor of popular institutions; but there is one point, with its connections, not so hackneyed as most others, to which I ask a brief attention. It is the effect to place capital on an equal footing with, if not above, labor, in the structure of government. It is assumed that labor is available only in connection with capital; that nobody labors unless somebody else, owning capital, somehow by the use of it induces him to labor. This assumed, it is next considered whether it is best that capital shall hire laborers, and thus induce them to work by their own consent, or buy them, and drive them to it without their consent. Having proceeded thus far, it is naturally concluded that all laborers are either hired laborers or what we call slaves. And further, it is assumed that whoever is once a hired laborer is fixed in that condition for life.
Now, there is no such relation between capital and labor as assumed, nor is there any such thing as a free man being fixed for life in the condition of a hired laborer. Both these assumptions are false, and all inferences from them are groundless.
“Labor is prior to, and independent of, capital. Capital is only the fruit of labor, and could never have existed if labor had not first existed. Labor is the superior of capital, and deserves much the higher consideration. Capital has its rights, which are as worthy of protection as any other rights.
-- Abraham Lincoln
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Hubbard
climber
San Diego
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You are missing my point Gary. Don't show up to work for anybody. Instead, start your own business and be your own boss. When you want to go climbing, fire yourself. No worries, you can hire yourself back at the end of the day. I am talking about a system which allows that. I am not focused on individuals at either end of the spectrum who abuse the system.
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rottingjohnny
Sport climber
Sands Motel , Las Vegas
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40.6 millipn Americans lived below the poverty line in 2016.....Capitalism is the best system...?
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Hubbard
climber
San Diego
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Sorry to hear about your poverty Rotting. I guess we are brothers in that way. Please provide us with a better example where everybody has equal amounts of money, where the host country does not descend into hyper inflation and 90 percent of the population ends up in poverty. Spend some time over on the show me what you are building thread and see how other people are trying to do it for themselves. As Reilly pointed out up thread here, the country of France which started all this freedom has now placed huge barriers in front of anyone who wants to take responsibility for themselves. Thankfully we are not there yet. As it is, we have substantial socialist type programs already in place. I live in a neighborhood where plenty of people draw off these programs. None of them complain to me. Instead, they admit to how shitty it was where they came from and how amazing it is here.
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August West
Trad climber
Where the wind blows strange
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They can't have their cake and eat it too!
No, but they can have their cake and then eat your cake too.
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Hubbard
climber
San Diego
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One other thing: The price of an education has generally been equal to the price of a down payment to buy a house. This has held steady for decades. That is the moment of choice. Do you take that loan and buy a house someplace you can afford and become a capitalist because you now own capital. Capital being real estate. Or do you dream, and with more idealism, take the greater risk of going into debt for an education with the hope that you could make it bigger? One could save money by buying some cheap dirt and building their own home. And one could also save money buy reading a dictionary to learn the meaning of the words and then read the encyclopedia to figure out what the hell has happened and cut the university out of the path altogether. Mark Zuckerburg worked the college angle. He paid the man and now he is the man. But he did it with the power of his own idea and force of will in a normal university environment. Honnold has done something similar in the context of climbing, outside of the standard cultural path. Honnold's route held way more risk.
What is your risk tolerance? You can always join the Navy. Give it twenty five years and retire comfortably. What's to miss? Having fun climbing? Every choice has a price.
The relative few who are born into true wealth are just the lucky ones, Zuckerbergs kids for example. You can't hate them for that. When they grow up and act like idiots they will get what they deserve. Many of them don't act like idiots. Some of them do.
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Splater
climber
Grey Matter
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KSolem,
in reply to your responses:
1. The question I ask is why someone whose only income is capital gains and dividends taxes at a much lower rate than someone who works? Why are you avoiding that question? The same question that Warren Buffet has asked for decades. Why is ordinary income less sacred? You could say that ordinary earned income has already been taxed and is taxed again for Social Security, and then the Social Security payment is taxed a third time if you have other income once you are old. Why aren't you complaining about this triple taxation?
Keep in mind that short term capital gains are already treated at ordinary income tax rates, but still escape Social Security/Medicare. And then beyond one year our plutocrat government says it's a sacred long term gain. A better way would be to index gains for inflation, so over 10 years you could discount the gain 20% if there were a total of 20% inflation over those years.
In relative terms I'm a small investor, and any money I have invested is money I earned and paid regular income tax on it at the time.
You do realize that most big wealth was not ever based on earned income? Zuckerberg is not wealthy because he reinvested his yearly salary. Nor are most of the ultra wealthy. They pay themselves in stock options which "by coincidence" have far lower tax rates.
However, the tax on capital gains and dividends could still be made progressive so it doesn't make a big hit on the middle class, just like income taxes are "supposed" to be. This would help small investors like yourself whose investments actually came from true earned income. And maybe average your capital gains so one good year doesn't stick you in a much higher bracket.
Once adjustments were made for Inflation indexing and income averaging, I don’t see any reason for capital tax rates to be any different from ordinary income.
Right now the middle income tax brackets are:
22% starts at $38700 Plus 7.65% Soc Sec & Medicare employee Plus 7.65% Soc Sec & Medicare employer. Total 37.6%.
24% above $82500 Plus 7.65% Soc Sec & Medicare employee Plus 7.65% Soc Sec & Medicare employer. Total 39.6%.
32% above $157500 and up to $128000, Plus 7.65% Soc Sec & Medicare employee Plus 7.65% Soc Sec & Medicare employer. Total 47.6%.
35% above $200000
37% above $500000
And the much lower long term capital gains brackets are:
15% for $39,376 to $434,550.
Above that 20 percent.
Meanwhile, if those capital gains come from investments that don’t require any work from the taxpayer – real estate rentals, royalties, partnerships – they may be subject to the net investment income tax (NIIT) of 3.8 percent if income is above certain amounts. Either way the tax rate is far less than the total 37.6 - 47.6% middle class rate.
2. If someone like Jeff Bezos leaves $160 billion in stock to his heir, if the basis is allowed to reset, there would be tax at all, on stock that has NEVER been taxed. A ludicrous subsidy of the wealthy. Same thing with people like Bill Gates. If he gives most of his wealth away doing great things, then it isn't taxed. However if he were to leave it to an heir, who is more deserving or able to be taxed? People who win the lottery are taxed. So should people who win a huge inheritance.
4. We're not talking about deals that pay tax on the earnings. In a normal situation you or I might sell stock A and buy stock B. We would be taxed on the net gain of stock A, regardless of whether we bought stock B. A swap allowed the rich to escape paying tax on the gain they made on the first property. Most of those loopholes that allowed tax shelters to escape all taxes on gains by "swapping" for "like property" were removed by the recent tax changes. So the government already admitted that swaps are a pointless giveaway by eliminating them for all other purposes.
EXCEPT trump kept the one corrupt swap that he in particular uses: real estate swaps.
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Ksolem
Trad climber
Monrovia, California
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Splater, I think I was clear enough that I'm looking at your proposals from my point of view, how they would affect me. I'm not a person who needs loopholes closed, and I am most certainly not under taxed. Why do you propose taxing my cap gains, earned by investing earned income, at the same level as a wealthy person who invests money earned as cap gains in the first place?
People who win the lottery are taxed. So should people who win a huge inheritance.
Huge inheritances are taxed handsomely. I believe, as I said above, that the threshold is $4M.
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Splater
climber
Grey Matter
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Why do you propose taxing my cap gains, earned by investing earned income, at the same level as a wealthy person who invests money earned as cap gains in the first place?
No, what I said is that in no case should cap gains tax on the wealthy be less than typical middle class Total tax.
And then I said the progressive part of cap gains tax should be kept and increased to make it more progressive. So I never said your tax should be the same rate.
Huge inheritances are taxed handsomely. I believe, as I said above, that the threshold is $4M.
Not if they are allowed to change the basis to a new higher market value, instead of keeping the lower old basis value.
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Reilly
Mountain climber
The Other Monrovia- CA
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KSolem, he wants it cause you have it and he wants it.
Isn’t that good enough for you?
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Dave
Mountain climber
the ANTI-fresno
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" You do realize that most big wealth was not ever based on earned income? Zuckerberg is not wealthy because he reinvested his yearly salary. Nor are most of the ultra wealthy. They pay themselves in stock options which "by coincidence" have far lower tax rates."
Much of the discussion around changing tax rates or taxing "wealth" has presumed that the wealth, say, Zuck's wealth, has been "stolen".
Someone explain how stock appreciation represents "stolen" wealth that would have somehow gone into *your* or anyone's pocket?
- a) unless Zuck sells his stock, its paper wealth that could evaporate at the whims of the market.
- b) should he sell some, how does that take any money out of your pocket - i.e. how is it stolen?
I would make thee argument that much of the hyperbole around wealth is false premise. Feel free to argue the point - I haven't seen it yet in this thread.
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Splater
climber
Grey Matter
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"KSolem, he wants it cause you have it and he wants it."
WRONG
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Splater
climber
Grey Matter
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Much of the discussion around changing tax rates or taxing "wealth" has presumed that the wealth, say, Zuck's wealth, has been "stolen".
No it hasn't.
I for one am not saying it was stolen, just that stocks should be subject to regular taxation when it is sold
Someone explain how stock appreciation represents "stolen" wealth that would have somehow gone into *your* or anyone's pocket?
That is a subject beyond what I was discussing. although I do think it is nuts that executive pay ratio at 400:1 is 10 times higher than it used to be.
- a) unless Zuck sells his stock, its paper wealth that could evaporate at the whims of the market.
Correct.
- b) should he sell some, how does that take any money out of your pocket - i.e. how is it stolen?
The question is why the net gains of selling this immense amount of stock should be taxed at a LOWER rate than I pay, all based on the silly religious notion that money earned by the rich is sacred.
Basically why are the rich effectively stealing from the middle class by taxing the middle class at a HIGHER rate?
You are still not answering the simple question:
why someone whose only income is capital gains and dividends taxes at a much lower rate than someone who works? Why are you avoiding that question? The same question that Warren Buffet has asked for decades. Why is ordinary income less sacred? You could say that ordinary earned income has already been taxed and is taxed again for Social Security, and then the Social Security payment is taxed a third time if you have other income once you are old. Why aren't you complaining about this triple taxation?
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