This is a great argument for why the business owner makes more money while the business is operating and during the sale. Still haven’t seen anyone explain why this means a successful business owner should be taxed at a lower rate when they have already overcome the risk to make a huge profit.

More risk = more reward refers to the payoff, not the tax treatment. Lots of states don’t even differentiate between capital gains and income at all. Taking that approach above $1 million seems pretty tame.

quote:
And when you frick up and do something stupid that costs him his business, you get to go get another McJob someplace. He loses everything he owns.

How many business owners risk everything they own

. Sure, some do, but most take a much smaller risk than that. And regardless, we are only talking about successful business owners who are selling their business. No one benefits from lower tax rates in that situation except them.

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Why are you conflating investments with income? They're completely different and are treated differently

I know they are treated differently right now. The government wants to incentivize investment and encourage saving for retirement so they lower cap gains rates in the middle to upper tax brackets. None of that is hurt by changing capital gains rates on people making > $1 million and I think is arguably more fair

This post was edited on 5/30/21 at 11:24 am

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Posted by Jorts R Us

Member since Aug 2013

14816 posts

Posted on 5/30/21 at 1:12 pm to Dixie.Reb

quote:
I’ve got no problem with owners making more than employees for all the reasons mentioned. I do have a problem when their earnings are taxed less than employees.

You know owners are paying ordinary tax rates when they draw a salary or when ordinary income flows through to their personal return, right?

The inequity you are attempting to point out doesn't really exist.

This post was edited on 5/30/21 at 1:17 pm

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Posted by NC_Tigah

Carolinas

Member since Sep 2003

123915 posts

Posted on 5/30/21 at 3:45 pm to Dixie.Reb

quote:
Still haven’t seen anyone explain why this means a successful business owner should be taxed at a lower rate when they have already overcome the risk to make a huge profit.

Can you give an example? Are you referring to deferred share compensation?

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Posted by Dixie.Reb

Oxford

Member since Jul 2013

2381 posts

Posted on 5/30/21 at 5:10 pm to NC_Tigah

The only example I’m talking about is someone earlier in the thread saying a small business owner selling their company would be affected by this change which means that it doesn’t just affect the 1%.

Yes, I know any earlier withdrawals from the business have already been taxed - Although the LLC pass through exemption means it may not have been taxed the same as earned income by employees. I’m saying additional income from the sale of the business should be taxed the same way as the earlier earnings.

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Posted by arcalades

USA

Member since Feb 2014

19276 posts

Posted on 5/30/21 at 10:10 pm to NC_Tigah

can we stop talking about Biden plans. dude's brain is a baked potato.

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Posted by SlowFlowPro

Simple Solutions to Complex Probs

Member since Jan 2004

422470 posts

Posted on 5/30/21 at 11:23 pm to Dixie.Reb

quote:
Still haven’t seen anyone explain why this means a successful business owner should be taxed at a lower rate when they have already overcome the risk to make a huge profit.

if we're talking about capital gains, then it deals with the investments the owner made. it's not "income"

quote:
More risk = more reward refers to the payoff, not the tax treatment.

the tax treatment was created to incentivize all americans to invest. that's why long term capital gains aren't taxed at ordinary income rates

this has nothing to do with owners v. employees. the employees also get favorable LTCG rates