I no longer buy that capital gains should be taxed at a lower rate | TigerDroppings.com

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Rex
LSU Fan
Here, there, and nowhere
Member since Sep 2004
56346 posts

I no longer buy that capital gains should be taxed at a lower rate



than the work from a man's labor, and I say this from the perspective of a retired person who lives almost totally on capital gains.

I'll give you two scenarios:

- Joe Worker grows his business to a million dollar income operation... pays 35% income tax... money that could have been channeled back into his business for expansion of equipment or personnel.

- Mitt Investor buys $1 million in Google stock... he sells the stock for $2 million, not so much on the historical performance of Google, but upon the optimism of the buyer. That $1 million differential doesn't expand Google's operation in any way and is taxed at 15% to the seller.

Immediately we see that the sweat of a man's brow is taxed at over twice the rate as the beneficiary of someone else's largesse... a profit that is often nothing more than the product of speculation.

Now, you might counter that the $1 million gain in the above scenario gets channeled back into investments and is thus good for economic growth, but is that REALLY the case when the buyer could have invested that money himself in something other than Google?

I do not buy that a man who expects or hopes to earn $1 million by buying and holding stock would be disincentivized by a tax rate higher than 15%. I do, however, believe that prosperity is generated by actual work rather than by speculation, and that higher rates disincentivize workers from actual toil.













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C
LSU Fan
The Woodlands, TX
Member since Dec 2007
22218 posts

re: I no longer buy that capital gains should be taxed at a lower rate


Capital gains owners of companies are hit with a business income tax. Get rid of that and I'd agree with you.





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NaturalBeam
LSU Fan
Member since Sep 2007
13120 posts

re: I no longer buy that capital gains should be taxed at a lower rate


But how did Mitt investor obtain that million that he is now investing? Didn't he earn it as Joe Worker did and was taxed at Joe Worker's rate on it?

I know it's tempting to compare apples to oranges here, but it doesn't work.


quote:

I do not buy that a man who expects or hopes to earn $1 million by buying and holding stock would be disincentivized by a tax rate higher than 15%
That's nonsense. A reasonable actor is disincentivized when you give him less in return.






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ottothewise
LSU Fan
Member since Sep 2008
32094 posts

re: I no longer buy that capital gains should be taxed at a lower rate


repeal the 16th.

VAT eliminates so much nonsense.

let people keep all their winnings if they gamble in the NYSE or NASDAQ.

no one without vested interest should be allowed to buy commodities to gamble/invest. those markets are for hedging.
We can figure out some way to let mom and pop squirrel away some gold and silver.






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MFn GIMP
LSU Fan
Owensboro, Kentucky
Member since Feb 2011
8782 posts

re: I no longer buy that capital gains should be taxed at a lower rate


quote:

Mitt Investor buys $1 million in Google stock

Where did that 1 million come from in the first place? Was it taxed already? You're damned right it was. So his investment income was, more than likely, already taxed at an income tax rate (which is never 35% for anyone) and now it is being taxed again at the cap gains rate.






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Rex
LSU Fan
Here, there, and nowhere
Member since Sep 2004
56346 posts

re: I no longer buy that capital gains should be taxed at a lower rate


quote:

A reasonable actor is disincentivized when you give him less in return.

A stock trader is not so much an investor as a money manager. Disincentivized from what? Whatever he pockets as a stock gain the stock buyer eats... the net total system "investment" (a misnomer) is zero. His options, also, are limited. He either buys more equities or holds his money, and the latter is almost totally unproductive. We COULD, however, convert him into a REAL investor, by reducing his taxation rate on actual productive work.






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wickowick
LSU Fan
Head of Island
Member since Dec 2006
24859 posts

re: I no longer buy that capital gains should be taxed at a lower rate


quote:

VAT eliminates so much nonsense.


VAT no, a flat tax yes. The VAT hides a large portion of the total tax amount with businesses paying a portion of the tax, let’s bring it out in the open.






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tigeralum06
LSU Fan
Member since Oct 2007
1384 posts

re: I no longer buy that capital gains should be taxed at a lower rate


This is a great example of how the tax code is structured to help maintain wealth not for people to increase their wealth.






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MFn GIMP
LSU Fan
Owensboro, Kentucky
Member since Feb 2011
8782 posts

re: I no longer buy that capital gains should be taxed at a lower rate


There is no risk involved in trading stock, right? Every single purchase = profit, right?






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Rex
LSU Fan
Here, there, and nowhere
Member since Sep 2004
56346 posts

re: I no longer buy that capital gains should be taxed at a lower rate


The tax code was written by rich people for rich people. Capital gains are taxed at lower rates because they can get away with it.







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slackhouse
LSU Fan
Member since Aug 2005
18468 posts
 Online 

re: I no longer buy that capital gains should be taxed at a lower rate


yo rex,

if we taxed capital gains at 100%, how much would that cut into the deficit?



This post was edited on 8/17 at 9:26 am


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NaturalBeam
LSU Fan
Member since Sep 2007
13120 posts

re: I no longer buy that capital gains should be taxed at a lower rate


I'm talking about the person with the skin in the game, not the stock broker. You're saying the company offering the stock has no incentive to offer investment in the company b/c the gain/loss occurs at the trade level? Why would any company ever go public if they weren't getting an influx of investment?





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Rex
LSU Fan
Here, there, and nowhere
Member since Sep 2004
56346 posts

re: I no longer buy that capital gains should be taxed at a lower rate


quote:

There is no risk involved in trading stock, right?

Of course there's risk, but there's also risk in running your own business.






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mtntiger
LSU Fan
Asheville, NC
Member since Oct 2003
9355 posts

re: I no longer buy that capital gains should be taxed at a lower rate


The answer, Rex, is right in front of you. Instead of calling for higher taxes on investors, we should lower the tax rate on business owners. If any Presidential candidate proposed this, I'd vote for him.

BTW, at some point, most of the people who have a million dollars to invest had to work like a dog to have that luxury. They should be applauded, not condemned/scorned.

You're right, though. A man should not have to pay over a third of the result of his own sweat to the gubmint.






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NaturalBeam
LSU Fan
Member since Sep 2007
13120 posts

re: I no longer buy that capital gains should be taxed at a lower rate


quote:

The tax code was written by rich people for rich people
I'm confused. Wasn't the tax code written by the same people who wrote the laws to provide welfare?






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Burt Reynolds
Florida State Fan
L.A.
Member since Jul 2008
19442 posts

re: I no longer buy that capital gains should be taxed at a lower rate


Link?





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tigeralum06
LSU Fan
Member since Oct 2007
1384 posts

re: I no longer buy that capital gains should be taxed at a lower rate


Your argument doesn't really work. If I come home with post tax money and hire a lawn guy. That money then gets taxed again. He buys groceries and then it is taxed again. Not much different then paying taxes on your investment income that was earned on post tax income.





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Dark Tiger
LSU Fan
Member since Sep 2006
4494 posts

re: I no longer buy that capital gains should be taxed at a lower rate


quote:

Joe Worker grows his business to a million dollar income operation


Not possible...try again






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constant cough
LSU Fan
Lafayette
Member since Jun 2007
38569 posts

re: I no longer buy that capital gains should be taxed at a lower rate


quote:

I no longer buy that capital gains should be taxed at a lower rate


I agree we should lower everyone's taxes.






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ScoopAndScore
baton rouge
Member since Oct 2008
7782 posts

re: I no longer buy that capital gains should be taxed at a lower rate


quote:

I no longer buy that capital gains should be taxed at a lower rate

Because you're an idiot. You do realize that the money being invested as capital has already been taxed once before, right?






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