|
|
United States6277 Posts
On July 20 2012 02:24 paralleluniverse wrote:Show nested quote +On July 20 2012 01:59 JonnyBNoHo wrote:On July 19 2012 22:09 paralleluniverse wrote:On July 19 2012 09:37 JonnyBNoHo wrote:On July 19 2012 09:03 sunprince wrote:On July 18 2012 12:59 JonnyBNoHo wrote:No it's double taxation. The term is not misapplied either - you'll find it used in textbooks aplenty. If I invest in a corporation by lending to it, the interest expense is 100% tax deductible for the corporation while taxed at ordinary income rates for the individual. Here the cash flow generated by the business is only taxed once - at the individual level. If I invest in a corporation by buying shares, corporate profits are taxed. If I receive any cash from the corporation I have to pay dividend taxes. So here the same cash flow is taxed twice (corp profits and dividends). Capital gains are a bit more squishy to show as double taxation since the only cash flow is at the investor level when an asset is bought and sold. However, the value of a firm is the sum of all future after tax cash flows (profits) discounted over time. So the value of the company already includes taxes. So when you tax cap gains you are taxing future expected profits (that will already be taxed). If that sounds too theoretical think of it this way - if it turns out that those future expected profits were imaginary the shares will fall to $0 - and the cap gain tax the government collected will be wiped out by cap losses. So cap gains only exist if profits exist - which are already taxed - and therefore double taxation exists. Try actually reading and responding to the points in the links I provided, instead of assuming I don't know what you're talking about. Your explanation is simply incorrect, for reasons that the links explain. Ok. First your blogspot article: As I said, I’ve heard it twice just this week where a conservative states unequivocally that a person who earns capital gains pays the 15% rate on top of any income tax rate. It’s not a straw man – it’s a very real misconception held by some conservatives. That would be a misconception - though I've never heard that one before. There is another double taxation argument that basically says the corporation has already paid its taxes on profits, and the price of my shares of stock reflect it. To then tax me on the increased value of my stock is a form of double taxation. There is truth in this argument, but it’s also a bit of a distraction.
As the individual shareholder I am not personally taxed twice. The corporation has paid its taxes and I pay my own capital gains tax. Yes, the value of my share is discounted based on the amount of corporate taxes paid, but I am not paying tax twice. The corporation, similarly, is not taxed twice. Not to mention, this argument only applies to capital gains earned through the purchase/sale of stock and would not apply to other capital gains like interest earned. Here's the problem: the taxation on the corporation does matter. If you own a small business as the sole owner as a sole proprietorship you ARE the business. The profit the business generates is your income and you pay taxes on it as your own income. The business itself pays no taxes. Corporations, on the other hand, are taxed themselves and any income that flows to the owner is taxed a second time as dividends. So two taxes on one stream of income (double taxation). The CTJ article makes 3 arguments: my replies follow.1) Some corporations pay no tax.This is irrelevant! The corporation pays the taxes it is supposed to. If you don't like the 'loophole' it uses then argue to close the loophole. 2) 2/3 of dividends are paid to tax-exempt entities. Another irrelevant argument! 3) Third, a capital gain from selling a corporate stock is not necessarily a form of corporate profit. Yes it is. As the CTJ article correctly points out the value can come from expected future profits. Therefore, and as I said in my previous response, the capital gain can only exist if the expected profits come true. And if they do, they will be taxed! This is a pointless semantics argument. Why does it matter that capital gains is "double tax"? Surely, the only thing that should matter is how much tax is paid and who pays it. And it seems that you've agreed to the argument that businesses shift the cost of their taxes onto the shareholders and customers. So how is it double taxation when businesses have shifted the burden of the tax onto others? You can't have it both ways. The cost of all taxes get shifted to some extent. Regardless, the point of the double taxation argument is that tax rates can appear lower than they really are. Since the argument about 'fair share' often revolves around effective tax rates the double taxation argument is used to illustrate that effective tax rates do not include all the explicit and implicit taxes that a taxpayer is paying. The same can be said about tax-exempt bonds where the tax is implicit. How can I shift my income tax onto you? The burden of the capital gains tax ultimately falls on people. Tax rates are lower than what they historically are, and I don't see how "double taxation" should come into the argument. What is of interest is how much tax does one have to pay, how much revenue is the government making, and is it good economics to increase/decrease taxes. A discussion of these 3 points doesn't need to refer to "double taxation". I admit I haven't read far back enough to see who brought the issue up in the first place.
It is relevant to the first point "how much tax does one have to pay" because double taxation or implicit taxes make it *appear* that someone is paying a lower tax rate than the underlying economics dictate. That's the extent to which it matters.
Tax shifting occurs not when the tax itself is shifted but when the underlying economic burden of the tax is shifted from one party to another. So when your taxes go up it is not only you that suffers, but everyone you would have done business with (but can't now) as well.
|
On July 20 2012 02:16 xDaunt wrote:
I can't take it anymore. I'll explain why what Obama said about "no one getting there on their own" is ridiculous and worthy of the ridicule that it is receiving. At best, it is a ludicrous strawman argument of the highest order. No one is arguing that the government has no role in providing basic infrastructure or that the basic infrastructure is unimportant. At worst, it demonstrates true antipathy towards fundamental American values.
For the life of me I don't understand how Obama could be stupid enough to go down this road. Elizabeth Warren already tried it out and got burned for it. This is an election where the economy is going to be the number one issue and there are already serious doubts about Obama's leadership on the economy. Obama's comments are precisely the type of thing that will drive voters away and sink him.
I fail to see how you showed in any way that his statement was ridiculous and/or a straw man. All I could read was some pseudo-outrage about how pointing out that individual initiative and doing things together go hand-in-hand is against fundamental American values (...really?).
|
I for one am getting extremely tired of the use of the term strawman. Everyone wants to be a basement philosopher, and is throwing this term around way too often. The last page alone has at least 5 posts talking about strawmen. People seem to think if they say that, they sound smart. It is infuriating. Kwizach already pointed out how one of our strawman culprits used the term wrong, so I wont go into too much detail, however everytime I see the term misused, I feel like putting my fist through my monitor.
|
On July 20 2012 02:10 Butterednuts wrote:
I'll be voting for Obama for 1 main reason. Gay marriage.
I am a gay man and would love the benefits that married couples get under the government with my partner.
This is what is important to me and that is why I will vote for Obama.
Whatever benefits that married couples get under the government, if those benefits were no longer provided by the government to any kind of married couple, how would you then decide for whom to vote ?
Is this an example of voting for Liberals because of the benefits you get from the government ?
|
On July 20 2012 02:16 xDaunt wrote:
I can't take it anymore. I'll explain why what Obama said about "no one getting there on their own" is ridiculous and worthy of the ridicule that it is receiving. At best, it is a ludicrous strawman argument of the highest order. No one is arguing that the government has no role in providing basic infrastructure or that the basic infrastructure is unimportant. At worst, it demonstrates true antipathy towards fundamental American values.
For the life of me I don't understand how Obama could be stupid enough to go down this road. Elizabeth Warren already tried it out and got burned for it. This is an election where the economy is going to be the number one issue and there are already serious doubts about Obama's leadership on the economy. Obama's comments are precisely the type of thing that will drive voters away and sink him.
? All Obama said was there are many outside factors that go into the success of people, government being one of them. The public sector (construction, teaching,) give you the infrastructure + education for you to be succesful, along side your desire/dedication to be great. it's common sense.. I have seen some distorted ads on this already
|
On July 20 2012 03:49 Kaitlin wrote:Show nested quote +On July 20 2012 02:10 Butterednuts wrote:
I'll be voting for Obama for 1 main reason. Gay marriage.
I am a gay man and would love the benefits that married couples get under the government with my partner.
This is what is important to me and that is why I will vote for Obama. Whatever benefits that married couples get under the government, if those benefits were no longer provided by the government to any kind of married couple, how would you then decide for whom to vote ? Is this an example of voting for Liberals because of the benefits you get from the government ?
I hope he doesn't even dignify your pathetic excuse for an intelligent post with a reply, a man makes his voting intentions clear and all you can do is conjure up is a nonsensical hypothetical that's meant to indict partisanship that is simply not there. All he wants are equal rights.
|
On July 20 2012 02:16 xDaunt wrote:
I can't take it anymore. I'll explain why what Obama said about "no one getting there on their own" is ridiculous and worthy of the ridicule that it is receiving. At best, it is a ludicrous strawman argument of the highest order. No one is arguing that the government has no role in providing basic infrastructure or that the basic infrastructure is unimportant. At worst, it demonstrates true antipathy towards fundamental American values.
For the life of me I don't understand how Obama could be stupid enough to go down this road. Elizabeth Warren already tried it out and got burned for it. This is an election where the economy is going to be the number one issue and there are already serious doubts about Obama's leadership on the economy. Obama's comments are precisely the type of thing that will drive voters away and sink him.
Actually that's precisely what people are arguing.
|
On July 20 2012 03:54 farvacola wrote:Show nested quote +On July 20 2012 03:49 Kaitlin wrote:On July 20 2012 02:10 Butterednuts wrote:
I'll be voting for Obama for 1 main reason. Gay marriage.
I am a gay man and would love the benefits that married couples get under the government with my partner.
This is what is important to me and that is why I will vote for Obama. Whatever benefits that married couples get under the government, if those benefits were no longer provided by the government to any kind of married couple, how would you then decide for whom to vote ? Is this an example of voting for Liberals because of the benefits you get from the government ? I hope he doesn't even dignify your pathetic excuse for an intelligent post with a reply, a man makes his voting intentions clear and all you can conjure up is a nonsensical hypothetical that's meant to indict partisanship that is simply not there. All he wants are equal rights.
Actually it's the opposite. Wanting to vote for Obama solely so he can appoint liberal Supreme Court justices is the most partisan reason there is to vote for him. That you agree with it on one issue doesn't change that.
Now, is it a bad reason? That's an entirely separate debate. I can respect making the intentions explicit and politics is a chess game where the next president may appoint 3 judges. Ginsberg is 79, Scalia is 76, and Kennedy is 75. That's one liberal justice and two conservatives. If it's Obama, he could make the court 5-4 liberal. If it's Romney, he could make it 6-3 conservative. That's quite a difference.
|
On July 20 2012 03:07 JonnyBNoHo wrote:Show nested quote +On July 20 2012 02:24 paralleluniverse wrote:On July 20 2012 01:59 JonnyBNoHo wrote:On July 19 2012 22:09 paralleluniverse wrote:On July 19 2012 09:37 JonnyBNoHo wrote:On July 19 2012 09:03 sunprince wrote:On July 18 2012 12:59 JonnyBNoHo wrote:No it's double taxation. The term is not misapplied either - you'll find it used in textbooks aplenty. If I invest in a corporation by lending to it, the interest expense is 100% tax deductible for the corporation while taxed at ordinary income rates for the individual. Here the cash flow generated by the business is only taxed once - at the individual level. If I invest in a corporation by buying shares, corporate profits are taxed. If I receive any cash from the corporation I have to pay dividend taxes. So here the same cash flow is taxed twice (corp profits and dividends). Capital gains are a bit more squishy to show as double taxation since the only cash flow is at the investor level when an asset is bought and sold. However, the value of a firm is the sum of all future after tax cash flows (profits) discounted over time. So the value of the company already includes taxes. So when you tax cap gains you are taxing future expected profits (that will already be taxed). If that sounds too theoretical think of it this way - if it turns out that those future expected profits were imaginary the shares will fall to $0 - and the cap gain tax the government collected will be wiped out by cap losses. So cap gains only exist if profits exist - which are already taxed - and therefore double taxation exists. Try actually reading and responding to the points in the links I provided, instead of assuming I don't know what you're talking about. Your explanation is simply incorrect, for reasons that the links explain. Ok. First your blogspot article: As I said, I’ve heard it twice just this week where a conservative states unequivocally that a person who earns capital gains pays the 15% rate on top of any income tax rate. It’s not a straw man – it’s a very real misconception held by some conservatives. That would be a misconception - though I've never heard that one before. There is another double taxation argument that basically says the corporation has already paid its taxes on profits, and the price of my shares of stock reflect it. To then tax me on the increased value of my stock is a form of double taxation. There is truth in this argument, but it’s also a bit of a distraction.
As the individual shareholder I am not personally taxed twice. The corporation has paid its taxes and I pay my own capital gains tax. Yes, the value of my share is discounted based on the amount of corporate taxes paid, but I am not paying tax twice. The corporation, similarly, is not taxed twice. Not to mention, this argument only applies to capital gains earned through the purchase/sale of stock and would not apply to other capital gains like interest earned. Here's the problem: the taxation on the corporation does matter. If you own a small business as the sole owner as a sole proprietorship you ARE the business. The profit the business generates is your income and you pay taxes on it as your own income. The business itself pays no taxes. Corporations, on the other hand, are taxed themselves and any income that flows to the owner is taxed a second time as dividends. So two taxes on one stream of income (double taxation). The CTJ article makes 3 arguments: my replies follow.1) Some corporations pay no tax.This is irrelevant! The corporation pays the taxes it is supposed to. If you don't like the 'loophole' it uses then argue to close the loophole. 2) 2/3 of dividends are paid to tax-exempt entities. Another irrelevant argument! 3) Third, a capital gain from selling a corporate stock is not necessarily a form of corporate profit. Yes it is. As the CTJ article correctly points out the value can come from expected future profits. Therefore, and as I said in my previous response, the capital gain can only exist if the expected profits come true. And if they do, they will be taxed! This is a pointless semantics argument. Why does it matter that capital gains is "double tax"? Surely, the only thing that should matter is how much tax is paid and who pays it. And it seems that you've agreed to the argument that businesses shift the cost of their taxes onto the shareholders and customers. So how is it double taxation when businesses have shifted the burden of the tax onto others? You can't have it both ways. The cost of all taxes get shifted to some extent. Regardless, the point of the double taxation argument is that tax rates can appear lower than they really are. Since the argument about 'fair share' often revolves around effective tax rates the double taxation argument is used to illustrate that effective tax rates do not include all the explicit and implicit taxes that a taxpayer is paying. The same can be said about tax-exempt bonds where the tax is implicit. How can I shift my income tax onto you? The burden of the capital gains tax ultimately falls on people. Tax rates are lower than what they historically are, and I don't see how "double taxation" should come into the argument. What is of interest is how much tax does one have to pay, how much revenue is the government making, and is it good economics to increase/decrease taxes. A discussion of these 3 points doesn't need to refer to "double taxation". I admit I haven't read far back enough to see who brought the issue up in the first place. It is relevant to the first point "how much tax does one have to pay" because double taxation or implicit taxes make it *appear* that someone is paying a lower tax rate than the underlying economics dictate. That's the extent to which it matters. Tax shifting occurs not when the tax itself is shifted but when the underlying economic burden of the tax is shifted from one party to another. So when your taxes go up it is not only you that suffers, but everyone you would have done business with (but can't now) as well.
How much tax you pay in this case nominally is simply 15% of your capital gains, which can be compared with previous higher capital gain tax rates. What's the use of trying to work out how much you really pay, accounting for the hard/impossible to know tax shifting effect, unless you want to see how much more money you will have if capital gains tax is abolished?
Capital gains tax isn't the only tax that has flow on effects, in fact, it's not the the only thing that has flow on effect. Basically everything has flow on effects.
|
On July 20 2012 03:07 JonnyBNoHo wrote:Show nested quote +On July 20 2012 02:24 paralleluniverse wrote:On July 20 2012 01:59 JonnyBNoHo wrote:On July 19 2012 22:09 paralleluniverse wrote:On July 19 2012 09:37 JonnyBNoHo wrote:On July 19 2012 09:03 sunprince wrote:On July 18 2012 12:59 JonnyBNoHo wrote:No it's double taxation. The term is not misapplied either - you'll find it used in textbooks aplenty. If I invest in a corporation by lending to it, the interest expense is 100% tax deductible for the corporation while taxed at ordinary income rates for the individual. Here the cash flow generated by the business is only taxed once - at the individual level. If I invest in a corporation by buying shares, corporate profits are taxed. If I receive any cash from the corporation I have to pay dividend taxes. So here the same cash flow is taxed twice (corp profits and dividends). Capital gains are a bit more squishy to show as double taxation since the only cash flow is at the investor level when an asset is bought and sold. However, the value of a firm is the sum of all future after tax cash flows (profits) discounted over time. So the value of the company already includes taxes. So when you tax cap gains you are taxing future expected profits (that will already be taxed). If that sounds too theoretical think of it this way - if it turns out that those future expected profits were imaginary the shares will fall to $0 - and the cap gain tax the government collected will be wiped out by cap losses. So cap gains only exist if profits exist - which are already taxed - and therefore double taxation exists. Try actually reading and responding to the points in the links I provided, instead of assuming I don't know what you're talking about. Your explanation is simply incorrect, for reasons that the links explain. Ok. First your blogspot article: As I said, I’ve heard it twice just this week where a conservative states unequivocally that a person who earns capital gains pays the 15% rate on top of any income tax rate. It’s not a straw man – it’s a very real misconception held by some conservatives. That would be a misconception - though I've never heard that one before. There is another double taxation argument that basically says the corporation has already paid its taxes on profits, and the price of my shares of stock reflect it. To then tax me on the increased value of my stock is a form of double taxation. There is truth in this argument, but it’s also a bit of a distraction.
As the individual shareholder I am not personally taxed twice. The corporation has paid its taxes and I pay my own capital gains tax. Yes, the value of my share is discounted based on the amount of corporate taxes paid, but I am not paying tax twice. The corporation, similarly, is not taxed twice. Not to mention, this argument only applies to capital gains earned through the purchase/sale of stock and would not apply to other capital gains like interest earned. Here's the problem: the taxation on the corporation does matter. If you own a small business as the sole owner as a sole proprietorship you ARE the business. The profit the business generates is your income and you pay taxes on it as your own income. The business itself pays no taxes. Corporations, on the other hand, are taxed themselves and any income that flows to the owner is taxed a second time as dividends. So two taxes on one stream of income (double taxation). The CTJ article makes 3 arguments: my replies follow.1) Some corporations pay no tax.This is irrelevant! The corporation pays the taxes it is supposed to. If you don't like the 'loophole' it uses then argue to close the loophole. 2) 2/3 of dividends are paid to tax-exempt entities. Another irrelevant argument! 3) Third, a capital gain from selling a corporate stock is not necessarily a form of corporate profit. Yes it is. As the CTJ article correctly points out the value can come from expected future profits. Therefore, and as I said in my previous response, the capital gain can only exist if the expected profits come true. And if they do, they will be taxed! This is a pointless semantics argument. Why does it matter that capital gains is "double tax"? Surely, the only thing that should matter is how much tax is paid and who pays it. And it seems that you've agreed to the argument that businesses shift the cost of their taxes onto the shareholders and customers. So how is it double taxation when businesses have shifted the burden of the tax onto others? You can't have it both ways. The cost of all taxes get shifted to some extent. Regardless, the point of the double taxation argument is that tax rates can appear lower than they really are. Since the argument about 'fair share' often revolves around effective tax rates the double taxation argument is used to illustrate that effective tax rates do not include all the explicit and implicit taxes that a taxpayer is paying. The same can be said about tax-exempt bonds where the tax is implicit. How can I shift my income tax onto you? The burden of the capital gains tax ultimately falls on people. Tax rates are lower than what they historically are, and I don't see how "double taxation" should come into the argument. What is of interest is how much tax does one have to pay, how much revenue is the government making, and is it good economics to increase/decrease taxes. A discussion of these 3 points doesn't need to refer to "double taxation". I admit I haven't read far back enough to see who brought the issue up in the first place. It is relevant to the first point "how much tax does one have to pay" because double taxation or implicit taxes make it *appear* that someone is paying a lower tax rate than the underlying economics dictate. That's the extent to which it matters. Tax shifting occurs not when the tax itself is shifted but when the underlying economic burden of the tax is shifted from one party to another. So when your taxes go up it is not only you that suffers, but everyone you would have done business with (but can't now) as well.
I'm glad you pointed out that last paragraph, because that's also exactly how government spending works as well. So when the government collects that dollar in taxes and spends it on something else, it's benefiting more than that dollar. It's all about a tradeoff, and sometimes the economic activity from spending that dollar through the government is more than the activity lost by collecting that dollar.
|
On July 20 2012 04:03 coverpunch wrote:Show nested quote +On July 20 2012 03:54 farvacola wrote:On July 20 2012 03:49 Kaitlin wrote:On July 20 2012 02:10 Butterednuts wrote:
I'll be voting for Obama for 1 main reason. Gay marriage.
I am a gay man and would love the benefits that married couples get under the government with my partner.
This is what is important to me and that is why I will vote for Obama. Whatever benefits that married couples get under the government, if those benefits were no longer provided by the government to any kind of married couple, how would you then decide for whom to vote ? Is this an example of voting for Liberals because of the benefits you get from the government ? I hope he doesn't even dignify your pathetic excuse for an intelligent post with a reply, a man makes his voting intentions clear and all you can conjure up is a nonsensical hypothetical that's meant to indict partisanship that is simply not there. All he wants are equal rights. Actually it's the opposite. Wanting to vote for Obama solely so he can appoint liberal Supreme Court justices is the most partisan reason there is to vote for him. That you agree with it on one issue doesn't change that. Now, is it a bad reason? That's an entirely separate debate. I can respect making the intentions explicit and politics is a chess game where the next president may appoint 3 judges. Ginsberg is 79, Scalia is 76, and Kennedy is 75. That's one liberal justice and two conservatives. If it's Obama, he could make the court 5-4 liberal. If it's Romney, he could make it 6-3 conservative. That's quite a difference.
Your uncanny ability to absolutely fail at reading comprehension is on display yet again. How you boiled down the breadth of his post into an understanding that he intends to vote "solely so he can appoint liberal Supreme Court justices" the world may never know, as he had just previously described how Obama obviously more closely represents his own personal brand of politics than the alternative.
|
On July 20 2012 02:35 xDaunt wrote:Show nested quote +On July 20 2012 02:19 paralleluniverse wrote:On July 20 2012 02:16 xDaunt wrote:
I can't take it anymore. I'll explain why what Obama said about "no one getting there on their own" is ridiculous and worthy of the ridicule that it is receiving. At best, it is a ludicrous strawman argument of the highest order. No one is arguing that the government has no role in providing basic infrastructure or that the basic infrastructure is unimportant. At worst, it demonstrates true antipathy towards fundamental American values.
For the life of me I don't understand how Obama could be stupid enough to go down this road. Elizabeth Warren already tried it out and got burned for it. This is an election where the economy is going to be the number one issue and there are already serious doubts about Obama's leadership on the economy. Obama's comments are precisely the type of thing that will drive voters away and sink him. I can't take it anymore. You've made 2 long paragraphs on Obama's statement, giving not a single reason why his statement is wrong. You may want to read a little bit closer. I'm not taking issue with the "factual accuracy" so much as the merits of the argument itself.
I think you're reading way too much into some campaign trail hyperbole.
All Obama seemed to be saying is that everyone benefits from the government, even so-called 'self-made' men and the extremely successful. He's just responding to the anti-government anti-tax hysteria that seems to have gripped the far right.
|
United States6277 Posts
On July 20 2012 04:19 paralleluniverse wrote:Show nested quote +On July 20 2012 03:07 JonnyBNoHo wrote:On July 20 2012 02:24 paralleluniverse wrote:On July 20 2012 01:59 JonnyBNoHo wrote:On July 19 2012 22:09 paralleluniverse wrote:On July 19 2012 09:37 JonnyBNoHo wrote:On July 19 2012 09:03 sunprince wrote:On July 18 2012 12:59 JonnyBNoHo wrote:No it's double taxation. The term is not misapplied either - you'll find it used in textbooks aplenty. If I invest in a corporation by lending to it, the interest expense is 100% tax deductible for the corporation while taxed at ordinary income rates for the individual. Here the cash flow generated by the business is only taxed once - at the individual level. If I invest in a corporation by buying shares, corporate profits are taxed. If I receive any cash from the corporation I have to pay dividend taxes. So here the same cash flow is taxed twice (corp profits and dividends). Capital gains are a bit more squishy to show as double taxation since the only cash flow is at the investor level when an asset is bought and sold. However, the value of a firm is the sum of all future after tax cash flows (profits) discounted over time. So the value of the company already includes taxes. So when you tax cap gains you are taxing future expected profits (that will already be taxed). If that sounds too theoretical think of it this way - if it turns out that those future expected profits were imaginary the shares will fall to $0 - and the cap gain tax the government collected will be wiped out by cap losses. So cap gains only exist if profits exist - which are already taxed - and therefore double taxation exists. Try actually reading and responding to the points in the links I provided, instead of assuming I don't know what you're talking about. Your explanation is simply incorrect, for reasons that the links explain. Ok. First your blogspot article: As I said, I’ve heard it twice just this week where a conservative states unequivocally that a person who earns capital gains pays the 15% rate on top of any income tax rate. It’s not a straw man – it’s a very real misconception held by some conservatives. That would be a misconception - though I've never heard that one before. There is another double taxation argument that basically says the corporation has already paid its taxes on profits, and the price of my shares of stock reflect it. To then tax me on the increased value of my stock is a form of double taxation. There is truth in this argument, but it’s also a bit of a distraction.
As the individual shareholder I am not personally taxed twice. The corporation has paid its taxes and I pay my own capital gains tax. Yes, the value of my share is discounted based on the amount of corporate taxes paid, but I am not paying tax twice. The corporation, similarly, is not taxed twice. Not to mention, this argument only applies to capital gains earned through the purchase/sale of stock and would not apply to other capital gains like interest earned. Here's the problem: the taxation on the corporation does matter. If you own a small business as the sole owner as a sole proprietorship you ARE the business. The profit the business generates is your income and you pay taxes on it as your own income. The business itself pays no taxes. Corporations, on the other hand, are taxed themselves and any income that flows to the owner is taxed a second time as dividends. So two taxes on one stream of income (double taxation). The CTJ article makes 3 arguments: my replies follow.1) Some corporations pay no tax.This is irrelevant! The corporation pays the taxes it is supposed to. If you don't like the 'loophole' it uses then argue to close the loophole. 2) 2/3 of dividends are paid to tax-exempt entities. Another irrelevant argument! 3) Third, a capital gain from selling a corporate stock is not necessarily a form of corporate profit. Yes it is. As the CTJ article correctly points out the value can come from expected future profits. Therefore, and as I said in my previous response, the capital gain can only exist if the expected profits come true. And if they do, they will be taxed! This is a pointless semantics argument. Why does it matter that capital gains is "double tax"? Surely, the only thing that should matter is how much tax is paid and who pays it. And it seems that you've agreed to the argument that businesses shift the cost of their taxes onto the shareholders and customers. So how is it double taxation when businesses have shifted the burden of the tax onto others? You can't have it both ways. The cost of all taxes get shifted to some extent. Regardless, the point of the double taxation argument is that tax rates can appear lower than they really are. Since the argument about 'fair share' often revolves around effective tax rates the double taxation argument is used to illustrate that effective tax rates do not include all the explicit and implicit taxes that a taxpayer is paying. The same can be said about tax-exempt bonds where the tax is implicit. How can I shift my income tax onto you? The burden of the capital gains tax ultimately falls on people. Tax rates are lower than what they historically are, and I don't see how "double taxation" should come into the argument. What is of interest is how much tax does one have to pay, how much revenue is the government making, and is it good economics to increase/decrease taxes. A discussion of these 3 points doesn't need to refer to "double taxation". I admit I haven't read far back enough to see who brought the issue up in the first place. It is relevant to the first point "how much tax does one have to pay" because double taxation or implicit taxes make it *appear* that someone is paying a lower tax rate than the underlying economics dictate. That's the extent to which it matters. Tax shifting occurs not when the tax itself is shifted but when the underlying economic burden of the tax is shifted from one party to another. So when your taxes go up it is not only you that suffers, but everyone you would have done business with (but can't now) as well. How much tax you pay in this case nominally is simply 15% of your capital gains, which can be compared with previous higher capital gain tax rates. What's the use of trying to work out how much you really pay, accounting for the hard/impossible to know tax shifting effect, unless you want to see how much more money you will have if capital gains tax is abolished? Capital gains tax isn't the only tax that has flow on effects, in fact, it's not the the only thing that has flow on effect. Basically everything has flow on effects.
Tax shifting is not relevant to the 'fair share' discussion since it is too hard to figure out exactly who pays what.
Double taxation and implicit taxes ARE relevant to the discussion of 'fair share' since it is much easier to get a decent idea as to what the real tax rate is (i.e. what share is actually being paid) which is at the heart of the matter.
Ex. Let's say I invest exclusively in local tax-free municipal bonds in an effort to help my local community finance its budget. If you looked at my tax return I'd have a very low effective tax rate and you might say I'm not paying my 'fair share' - yet that wouldn't be a fair assessment because of the implicit taxes built into the muni bond.
|
On July 20 2012 04:34 farvacola wrote:Show nested quote +On July 20 2012 04:03 coverpunch wrote:On July 20 2012 03:54 farvacola wrote:On July 20 2012 03:49 Kaitlin wrote:On July 20 2012 02:10 Butterednuts wrote:
I'll be voting for Obama for 1 main reason. Gay marriage.
I am a gay man and would love the benefits that married couples get under the government with my partner.
This is what is important to me and that is why I will vote for Obama. Whatever benefits that married couples get under the government, if those benefits were no longer provided by the government to any kind of married couple, how would you then decide for whom to vote ? Is this an example of voting for Liberals because of the benefits you get from the government ? I hope he doesn't even dignify your pathetic excuse for an intelligent post with a reply, a man makes his voting intentions clear and all you can conjure up is a nonsensical hypothetical that's meant to indict partisanship that is simply not there. All he wants are equal rights. Actually it's the opposite. Wanting to vote for Obama solely so he can appoint liberal Supreme Court justices is the most partisan reason there is to vote for him. That you agree with it on one issue doesn't change that. Now, is it a bad reason? That's an entirely separate debate. I can respect making the intentions explicit and politics is a chess game where the next president may appoint 3 judges. Ginsberg is 79, Scalia is 76, and Kennedy is 75. That's one liberal justice and two conservatives. If it's Obama, he could make the court 5-4 liberal. If it's Romney, he could make it 6-3 conservative. That's quite a difference. Your uncanny ability to absolutely fail at reading comprehension is on display yet again. How you boiled down the breadth of his post into an understanding that he intends to vote "solely so he can appoint liberal Supreme Court justices" the world may never know, as he had just previously described how Obama obviously more closely represents his own personal brand of politics than the alternative.
What?
On July 20 2012 02:10 Butterednuts wrote:
Also, we have about 2-3 Supreme Court justices that are "due". If Romney is elected, we will have more conservative justices in our court system for years to come, well beyond his 4 year term. If Obama is elected, we will most likely have considerably more liberal justices promoting legislation and ruling on things that I care about most.
This is what is important to me and that is why I will vote for Obama.
The stuff that comes before it is the one issue he cares about. But the politics is entirely about the Supreme Court.
|
On July 20 2012 04:19 paralleluniverse wrote:Show nested quote +On July 20 2012 03:07 JonnyBNoHo wrote:On July 20 2012 02:24 paralleluniverse wrote:On July 20 2012 01:59 JonnyBNoHo wrote:On July 19 2012 22:09 paralleluniverse wrote:On July 19 2012 09:37 JonnyBNoHo wrote:On July 19 2012 09:03 sunprince wrote:On July 18 2012 12:59 JonnyBNoHo wrote:No it's double taxation. The term is not misapplied either - you'll find it used in textbooks aplenty. If I invest in a corporation by lending to it, the interest expense is 100% tax deductible for the corporation while taxed at ordinary income rates for the individual. Here the cash flow generated by the business is only taxed once - at the individual level. If I invest in a corporation by buying shares, corporate profits are taxed. If I receive any cash from the corporation I have to pay dividend taxes. So here the same cash flow is taxed twice (corp profits and dividends). Capital gains are a bit more squishy to show as double taxation since the only cash flow is at the investor level when an asset is bought and sold. However, the value of a firm is the sum of all future after tax cash flows (profits) discounted over time. So the value of the company already includes taxes. So when you tax cap gains you are taxing future expected profits (that will already be taxed). If that sounds too theoretical think of it this way - if it turns out that those future expected profits were imaginary the shares will fall to $0 - and the cap gain tax the government collected will be wiped out by cap losses. So cap gains only exist if profits exist - which are already taxed - and therefore double taxation exists. Try actually reading and responding to the points in the links I provided, instead of assuming I don't know what you're talking about. Your explanation is simply incorrect, for reasons that the links explain. Ok. First your blogspot article: As I said, I’ve heard it twice just this week where a conservative states unequivocally that a person who earns capital gains pays the 15% rate on top of any income tax rate. It’s not a straw man – it’s a very real misconception held by some conservatives. That would be a misconception - though I've never heard that one before. There is another double taxation argument that basically says the corporation has already paid its taxes on profits, and the price of my shares of stock reflect it. To then tax me on the increased value of my stock is a form of double taxation. There is truth in this argument, but it’s also a bit of a distraction.
As the individual shareholder I am not personally taxed twice. The corporation has paid its taxes and I pay my own capital gains tax. Yes, the value of my share is discounted based on the amount of corporate taxes paid, but I am not paying tax twice. The corporation, similarly, is not taxed twice. Not to mention, this argument only applies to capital gains earned through the purchase/sale of stock and would not apply to other capital gains like interest earned. Here's the problem: the taxation on the corporation does matter. If you own a small business as the sole owner as a sole proprietorship you ARE the business. The profit the business generates is your income and you pay taxes on it as your own income. The business itself pays no taxes. Corporations, on the other hand, are taxed themselves and any income that flows to the owner is taxed a second time as dividends. So two taxes on one stream of income (double taxation). The CTJ article makes 3 arguments: my replies follow.1) Some corporations pay no tax.This is irrelevant! The corporation pays the taxes it is supposed to. If you don't like the 'loophole' it uses then argue to close the loophole. 2) 2/3 of dividends are paid to tax-exempt entities. Another irrelevant argument! 3) Third, a capital gain from selling a corporate stock is not necessarily a form of corporate profit. Yes it is. As the CTJ article correctly points out the value can come from expected future profits. Therefore, and as I said in my previous response, the capital gain can only exist if the expected profits come true. And if they do, they will be taxed! This is a pointless semantics argument. Why does it matter that capital gains is "double tax"? Surely, the only thing that should matter is how much tax is paid and who pays it. And it seems that you've agreed to the argument that businesses shift the cost of their taxes onto the shareholders and customers. So how is it double taxation when businesses have shifted the burden of the tax onto others? You can't have it both ways. The cost of all taxes get shifted to some extent. Regardless, the point of the double taxation argument is that tax rates can appear lower than they really are. Since the argument about 'fair share' often revolves around effective tax rates the double taxation argument is used to illustrate that effective tax rates do not include all the explicit and implicit taxes that a taxpayer is paying. The same can be said about tax-exempt bonds where the tax is implicit. How can I shift my income tax onto you? The burden of the capital gains tax ultimately falls on people. Tax rates are lower than what they historically are, and I don't see how "double taxation" should come into the argument. What is of interest is how much tax does one have to pay, how much revenue is the government making, and is it good economics to increase/decrease taxes. A discussion of these 3 points doesn't need to refer to "double taxation". I admit I haven't read far back enough to see who brought the issue up in the first place. It is relevant to the first point "how much tax does one have to pay" because double taxation or implicit taxes make it *appear* that someone is paying a lower tax rate than the underlying economics dictate. That's the extent to which it matters. Tax shifting occurs not when the tax itself is shifted but when the underlying economic burden of the tax is shifted from one party to another. So when your taxes go up it is not only you that suffers, but everyone you would have done business with (but can't now) as well. How much tax you pay in this case nominally is simply 15% of your capital gains, which can be compared with previous higher capital gain tax rates. What's the use of trying to work out how much you really pay, accounting for the hard/impossible to know tax shifting effect, unless you want to see how much more money you will have if capital gains tax is abolished? Capital gains tax isn't the only tax that has flow on effects, in fact, it's not the the only thing that has flow on effect. Basically everything has flow on effects.
It's not "normally" 15%. It's 15% if you fall into particular criteria. If you are not within the particular criteria you do not qualify for that tax rate. Why do we have it like this? Because the criteria mandates your investment be in domestic companies - thus the money is used to spur the economy. You raise the tax rate and you thusly decrease investment in the U.S. economy (not specifically responding to you, especially since you aren't apparently in the U.S.).
Almost all tax breaks or incentives exist so that investment gets pumped into the American economy rather than overseas.
|
United States6277 Posts
On July 20 2012 04:32 aksfjh wrote:Show nested quote +On July 20 2012 03:07 JonnyBNoHo wrote:On July 20 2012 02:24 paralleluniverse wrote:On July 20 2012 01:59 JonnyBNoHo wrote:On July 19 2012 22:09 paralleluniverse wrote:On July 19 2012 09:37 JonnyBNoHo wrote:On July 19 2012 09:03 sunprince wrote:On July 18 2012 12:59 JonnyBNoHo wrote:No it's double taxation. The term is not misapplied either - you'll find it used in textbooks aplenty. If I invest in a corporation by lending to it, the interest expense is 100% tax deductible for the corporation while taxed at ordinary income rates for the individual. Here the cash flow generated by the business is only taxed once - at the individual level. If I invest in a corporation by buying shares, corporate profits are taxed. If I receive any cash from the corporation I have to pay dividend taxes. So here the same cash flow is taxed twice (corp profits and dividends). Capital gains are a bit more squishy to show as double taxation since the only cash flow is at the investor level when an asset is bought and sold. However, the value of a firm is the sum of all future after tax cash flows (profits) discounted over time. So the value of the company already includes taxes. So when you tax cap gains you are taxing future expected profits (that will already be taxed). If that sounds too theoretical think of it this way - if it turns out that those future expected profits were imaginary the shares will fall to $0 - and the cap gain tax the government collected will be wiped out by cap losses. So cap gains only exist if profits exist - which are already taxed - and therefore double taxation exists. Try actually reading and responding to the points in the links I provided, instead of assuming I don't know what you're talking about. Your explanation is simply incorrect, for reasons that the links explain. Ok. First your blogspot article: As I said, I’ve heard it twice just this week where a conservative states unequivocally that a person who earns capital gains pays the 15% rate on top of any income tax rate. It’s not a straw man – it’s a very real misconception held by some conservatives. That would be a misconception - though I've never heard that one before. There is another double taxation argument that basically says the corporation has already paid its taxes on profits, and the price of my shares of stock reflect it. To then tax me on the increased value of my stock is a form of double taxation. There is truth in this argument, but it’s also a bit of a distraction.
As the individual shareholder I am not personally taxed twice. The corporation has paid its taxes and I pay my own capital gains tax. Yes, the value of my share is discounted based on the amount of corporate taxes paid, but I am not paying tax twice. The corporation, similarly, is not taxed twice. Not to mention, this argument only applies to capital gains earned through the purchase/sale of stock and would not apply to other capital gains like interest earned. Here's the problem: the taxation on the corporation does matter. If you own a small business as the sole owner as a sole proprietorship you ARE the business. The profit the business generates is your income and you pay taxes on it as your own income. The business itself pays no taxes. Corporations, on the other hand, are taxed themselves and any income that flows to the owner is taxed a second time as dividends. So two taxes on one stream of income (double taxation). The CTJ article makes 3 arguments: my replies follow.1) Some corporations pay no tax.This is irrelevant! The corporation pays the taxes it is supposed to. If you don't like the 'loophole' it uses then argue to close the loophole. 2) 2/3 of dividends are paid to tax-exempt entities. Another irrelevant argument! 3) Third, a capital gain from selling a corporate stock is not necessarily a form of corporate profit. Yes it is. As the CTJ article correctly points out the value can come from expected future profits. Therefore, and as I said in my previous response, the capital gain can only exist if the expected profits come true. And if they do, they will be taxed! This is a pointless semantics argument. Why does it matter that capital gains is "double tax"? Surely, the only thing that should matter is how much tax is paid and who pays it. And it seems that you've agreed to the argument that businesses shift the cost of their taxes onto the shareholders and customers. So how is it double taxation when businesses have shifted the burden of the tax onto others? You can't have it both ways. The cost of all taxes get shifted to some extent. Regardless, the point of the double taxation argument is that tax rates can appear lower than they really are. Since the argument about 'fair share' often revolves around effective tax rates the double taxation argument is used to illustrate that effective tax rates do not include all the explicit and implicit taxes that a taxpayer is paying. The same can be said about tax-exempt bonds where the tax is implicit. How can I shift my income tax onto you? The burden of the capital gains tax ultimately falls on people. Tax rates are lower than what they historically are, and I don't see how "double taxation" should come into the argument. What is of interest is how much tax does one have to pay, how much revenue is the government making, and is it good economics to increase/decrease taxes. A discussion of these 3 points doesn't need to refer to "double taxation". I admit I haven't read far back enough to see who brought the issue up in the first place. It is relevant to the first point "how much tax does one have to pay" because double taxation or implicit taxes make it *appear* that someone is paying a lower tax rate than the underlying economics dictate. That's the extent to which it matters. Tax shifting occurs not when the tax itself is shifted but when the underlying economic burden of the tax is shifted from one party to another. So when your taxes go up it is not only you that suffers, but everyone you would have done business with (but can't now) as well. I'm glad you pointed out that last paragraph, because that's also exactly how government spending works as well. So when the government collects that dollar in taxes and spends it on something else, it's benefiting more than that dollar. It's all about a tradeoff, and sometimes the economic activity from spending that dollar through the government is more than the activity lost by collecting that dollar.
Yes, absolutely. You can certainly make the argument that raising taxes on capital gains (or anything else) is worth it because you'd rather the government have the money. My issue was with arguing that a certain person (Romney or the 1% in general) wasn't paying his 'fair share' largely because of a low tax rate on investments.
|
On July 20 2012 04:37 Defacer wrote:Show nested quote +On July 20 2012 02:35 xDaunt wrote:On July 20 2012 02:19 paralleluniverse wrote:On July 20 2012 02:16 xDaunt wrote:
I can't take it anymore. I'll explain why what Obama said about "no one getting there on their own" is ridiculous and worthy of the ridicule that it is receiving. At best, it is a ludicrous strawman argument of the highest order. No one is arguing that the government has no role in providing basic infrastructure or that the basic infrastructure is unimportant. At worst, it demonstrates true antipathy towards fundamental American values.
For the life of me I don't understand how Obama could be stupid enough to go down this road. Elizabeth Warren already tried it out and got burned for it. This is an election where the economy is going to be the number one issue and there are already serious doubts about Obama's leadership on the economy. Obama's comments are precisely the type of thing that will drive voters away and sink him. I can't take it anymore. You've made 2 long paragraphs on Obama's statement, giving not a single reason why his statement is wrong. You may want to read a little bit closer. I'm not taking issue with the "factual accuracy" so much as the merits of the argument itself. I think you're reading way too much into some campaign trail hyperbole. All Obama seemed to be saying is that everyone benefits from the government, even so-called 'self-made' men and the extremely successful. He's just responding to the anti-government anti-tax hysteria that seems to have gripped the far right.
I disagree. If all that Obama was saying was that everyone needs government to some degree for providing public goods and services, he very easily could have said as such without overtly (or accidentally, if you prefer) shitting on the accomplishments of entrepreneurs and others who have done well for themselves.
|
On July 20 2012 05:13 JonnyBNoHo wrote:Show nested quote +On July 20 2012 04:32 aksfjh wrote:On July 20 2012 03:07 JonnyBNoHo wrote:On July 20 2012 02:24 paralleluniverse wrote:On July 20 2012 01:59 JonnyBNoHo wrote:On July 19 2012 22:09 paralleluniverse wrote:On July 19 2012 09:37 JonnyBNoHo wrote:On July 19 2012 09:03 sunprince wrote:On July 18 2012 12:59 JonnyBNoHo wrote:No it's double taxation. The term is not misapplied either - you'll find it used in textbooks aplenty. If I invest in a corporation by lending to it, the interest expense is 100% tax deductible for the corporation while taxed at ordinary income rates for the individual. Here the cash flow generated by the business is only taxed once - at the individual level. If I invest in a corporation by buying shares, corporate profits are taxed. If I receive any cash from the corporation I have to pay dividend taxes. So here the same cash flow is taxed twice (corp profits and dividends). Capital gains are a bit more squishy to show as double taxation since the only cash flow is at the investor level when an asset is bought and sold. However, the value of a firm is the sum of all future after tax cash flows (profits) discounted over time. So the value of the company already includes taxes. So when you tax cap gains you are taxing future expected profits (that will already be taxed). If that sounds too theoretical think of it this way - if it turns out that those future expected profits were imaginary the shares will fall to $0 - and the cap gain tax the government collected will be wiped out by cap losses. So cap gains only exist if profits exist - which are already taxed - and therefore double taxation exists. Try actually reading and responding to the points in the links I provided, instead of assuming I don't know what you're talking about. Your explanation is simply incorrect, for reasons that the links explain. Ok. First your blogspot article: As I said, I’ve heard it twice just this week where a conservative states unequivocally that a person who earns capital gains pays the 15% rate on top of any income tax rate. It’s not a straw man – it’s a very real misconception held by some conservatives. That would be a misconception - though I've never heard that one before. There is another double taxation argument that basically says the corporation has already paid its taxes on profits, and the price of my shares of stock reflect it. To then tax me on the increased value of my stock is a form of double taxation. There is truth in this argument, but it’s also a bit of a distraction.
As the individual shareholder I am not personally taxed twice. The corporation has paid its taxes and I pay my own capital gains tax. Yes, the value of my share is discounted based on the amount of corporate taxes paid, but I am not paying tax twice. The corporation, similarly, is not taxed twice. Not to mention, this argument only applies to capital gains earned through the purchase/sale of stock and would not apply to other capital gains like interest earned. Here's the problem: the taxation on the corporation does matter. If you own a small business as the sole owner as a sole proprietorship you ARE the business. The profit the business generates is your income and you pay taxes on it as your own income. The business itself pays no taxes. Corporations, on the other hand, are taxed themselves and any income that flows to the owner is taxed a second time as dividends. So two taxes on one stream of income (double taxation). The CTJ article makes 3 arguments: my replies follow.1) Some corporations pay no tax.This is irrelevant! The corporation pays the taxes it is supposed to. If you don't like the 'loophole' it uses then argue to close the loophole. 2) 2/3 of dividends are paid to tax-exempt entities. Another irrelevant argument! 3) Third, a capital gain from selling a corporate stock is not necessarily a form of corporate profit. Yes it is. As the CTJ article correctly points out the value can come from expected future profits. Therefore, and as I said in my previous response, the capital gain can only exist if the expected profits come true. And if they do, they will be taxed! This is a pointless semantics argument. Why does it matter that capital gains is "double tax"? Surely, the only thing that should matter is how much tax is paid and who pays it. And it seems that you've agreed to the argument that businesses shift the cost of their taxes onto the shareholders and customers. So how is it double taxation when businesses have shifted the burden of the tax onto others? You can't have it both ways. The cost of all taxes get shifted to some extent. Regardless, the point of the double taxation argument is that tax rates can appear lower than they really are. Since the argument about 'fair share' often revolves around effective tax rates the double taxation argument is used to illustrate that effective tax rates do not include all the explicit and implicit taxes that a taxpayer is paying. The same can be said about tax-exempt bonds where the tax is implicit. How can I shift my income tax onto you? The burden of the capital gains tax ultimately falls on people. Tax rates are lower than what they historically are, and I don't see how "double taxation" should come into the argument. What is of interest is how much tax does one have to pay, how much revenue is the government making, and is it good economics to increase/decrease taxes. A discussion of these 3 points doesn't need to refer to "double taxation". I admit I haven't read far back enough to see who brought the issue up in the first place. It is relevant to the first point "how much tax does one have to pay" because double taxation or implicit taxes make it *appear* that someone is paying a lower tax rate than the underlying economics dictate. That's the extent to which it matters. Tax shifting occurs not when the tax itself is shifted but when the underlying economic burden of the tax is shifted from one party to another. So when your taxes go up it is not only you that suffers, but everyone you would have done business with (but can't now) as well. I'm glad you pointed out that last paragraph, because that's also exactly how government spending works as well. So when the government collects that dollar in taxes and spends it on something else, it's benefiting more than that dollar. It's all about a tradeoff, and sometimes the economic activity from spending that dollar through the government is more than the activity lost by collecting that dollar. Yes, absolutely. You can certainly make the argument that raising taxes on capital gains (or anything else) is worth it because you'd rather the government have the money. My issue was with arguing that a certain person (Romney or the 1% in general) wasn't paying his 'fair share' largely because of a low tax rate on investments.
It is my experience that most people who feel the top 1% are not paying their fair share see the progressive tax code, which the vast majority of us are beholden to, as the most fair system. This essentially means that at the end of the day, one way or another, we all need to be paying approximately our tax bracket percentage. For people like Romney this is close to 35% and he pays 13.9%.
Now, understand that this is an emotional and focused view. Most middle class people I think understand that you have to create incentives for the rich to take risks (low capital gains taxes for example) but most see this as a deal with the devil and thus all the hate.
|
On July 20 2012 05:06 FabledIntegral wrote:Show nested quote +On July 20 2012 04:19 paralleluniverse wrote:On July 20 2012 03:07 JonnyBNoHo wrote:On July 20 2012 02:24 paralleluniverse wrote:On July 20 2012 01:59 JonnyBNoHo wrote:On July 19 2012 22:09 paralleluniverse wrote:On July 19 2012 09:37 JonnyBNoHo wrote:On July 19 2012 09:03 sunprince wrote:On July 18 2012 12:59 JonnyBNoHo wrote:No it's double taxation. The term is not misapplied either - you'll find it used in textbooks aplenty. If I invest in a corporation by lending to it, the interest expense is 100% tax deductible for the corporation while taxed at ordinary income rates for the individual. Here the cash flow generated by the business is only taxed once - at the individual level. If I invest in a corporation by buying shares, corporate profits are taxed. If I receive any cash from the corporation I have to pay dividend taxes. So here the same cash flow is taxed twice (corp profits and dividends). Capital gains are a bit more squishy to show as double taxation since the only cash flow is at the investor level when an asset is bought and sold. However, the value of a firm is the sum of all future after tax cash flows (profits) discounted over time. So the value of the company already includes taxes. So when you tax cap gains you are taxing future expected profits (that will already be taxed). If that sounds too theoretical think of it this way - if it turns out that those future expected profits were imaginary the shares will fall to $0 - and the cap gain tax the government collected will be wiped out by cap losses. So cap gains only exist if profits exist - which are already taxed - and therefore double taxation exists. Try actually reading and responding to the points in the links I provided, instead of assuming I don't know what you're talking about. Your explanation is simply incorrect, for reasons that the links explain. Ok. First your blogspot article: As I said, I’ve heard it twice just this week where a conservative states unequivocally that a person who earns capital gains pays the 15% rate on top of any income tax rate. It’s not a straw man – it’s a very real misconception held by some conservatives. That would be a misconception - though I've never heard that one before. There is another double taxation argument that basically says the corporation has already paid its taxes on profits, and the price of my shares of stock reflect it. To then tax me on the increased value of my stock is a form of double taxation. There is truth in this argument, but it’s also a bit of a distraction.
As the individual shareholder I am not personally taxed twice. The corporation has paid its taxes and I pay my own capital gains tax. Yes, the value of my share is discounted based on the amount of corporate taxes paid, but I am not paying tax twice. The corporation, similarly, is not taxed twice. Not to mention, this argument only applies to capital gains earned through the purchase/sale of stock and would not apply to other capital gains like interest earned. Here's the problem: the taxation on the corporation does matter. If you own a small business as the sole owner as a sole proprietorship you ARE the business. The profit the business generates is your income and you pay taxes on it as your own income. The business itself pays no taxes. Corporations, on the other hand, are taxed themselves and any income that flows to the owner is taxed a second time as dividends. So two taxes on one stream of income (double taxation). The CTJ article makes 3 arguments: my replies follow.1) Some corporations pay no tax.This is irrelevant! The corporation pays the taxes it is supposed to. If you don't like the 'loophole' it uses then argue to close the loophole. 2) 2/3 of dividends are paid to tax-exempt entities. Another irrelevant argument! 3) Third, a capital gain from selling a corporate stock is not necessarily a form of corporate profit. Yes it is. As the CTJ article correctly points out the value can come from expected future profits. Therefore, and as I said in my previous response, the capital gain can only exist if the expected profits come true. And if they do, they will be taxed! This is a pointless semantics argument. Why does it matter that capital gains is "double tax"? Surely, the only thing that should matter is how much tax is paid and who pays it. And it seems that you've agreed to the argument that businesses shift the cost of their taxes onto the shareholders and customers. So how is it double taxation when businesses have shifted the burden of the tax onto others? You can't have it both ways. The cost of all taxes get shifted to some extent. Regardless, the point of the double taxation argument is that tax rates can appear lower than they really are. Since the argument about 'fair share' often revolves around effective tax rates the double taxation argument is used to illustrate that effective tax rates do not include all the explicit and implicit taxes that a taxpayer is paying. The same can be said about tax-exempt bonds where the tax is implicit. How can I shift my income tax onto you? The burden of the capital gains tax ultimately falls on people. Tax rates are lower than what they historically are, and I don't see how "double taxation" should come into the argument. What is of interest is how much tax does one have to pay, how much revenue is the government making, and is it good economics to increase/decrease taxes. A discussion of these 3 points doesn't need to refer to "double taxation". I admit I haven't read far back enough to see who brought the issue up in the first place. It is relevant to the first point "how much tax does one have to pay" because double taxation or implicit taxes make it *appear* that someone is paying a lower tax rate than the underlying economics dictate. That's the extent to which it matters. Tax shifting occurs not when the tax itself is shifted but when the underlying economic burden of the tax is shifted from one party to another. So when your taxes go up it is not only you that suffers, but everyone you would have done business with (but can't now) as well. How much tax you pay in this case nominally is simply 15% of your capital gains, which can be compared with previous higher capital gain tax rates. What's the use of trying to work out how much you really pay, accounting for the hard/impossible to know tax shifting effect, unless you want to see how much more money you will have if capital gains tax is abolished? Capital gains tax isn't the only tax that has flow on effects, in fact, it's not the the only thing that has flow on effect. Basically everything has flow on effects. It's not "normally" 15%. It's 15% if you fall into particular criteria. If you are not within the particular criteria you do not qualify for that tax rate. Why do we have it like this? Because the criteria mandates your investment be in domestic companies - thus the money is used to spur the economy. You raise the tax rate and you thusly decrease investment in the U.S. economy (not specifically responding to you, especially since you aren't apparently in the U.S.). Almost all tax breaks or incentives exist so that investment gets pumped into the American economy rather than overseas.
Actually, all long term capital gains are taxed at 15%, the only criteria is that it meets the definition of a "capital gain". There's already natural incentive to keep investments in the US because you have to pay both foreign and US tax on foreign investments,effectively getting double taxed. There are things that help offset this, like foreign tax credits, but the rules are complex (depending on the country) and it doesn't always work out ideally. The 15% rate is really designed to just help corporations and wealthy invidivuals to maximize their profits, it's not designed as an incentive to invest only domestically. The low rate is also there to help offset the risk of making investments, in that you can just as easily lose a ton of money, so you get rewarded for taking the risk with a lower tax rate. In a lot of situations when you make money from a foreign country and take that money into the US it's considered a dividend or ordinary income so it does get taxed at a different rate, but again if it's considered a long term capital gain the rate is 15%, period.
|
On July 20 2012 05:47 stk01001 wrote:Show nested quote +On July 20 2012 05:06 FabledIntegral wrote:On July 20 2012 04:19 paralleluniverse wrote:
How much tax you pay in this case nominally is simply 15% of your capital gains, which can be compared with previous higher capital gain tax rates. What's the use of trying to work out how much you really pay, accounting for the hard/impossible to know tax shifting effect, unless you want to see how much more money you will have if capital gains tax is abolished?
Capital gains tax isn't the only tax that has flow on effects, in fact, it's not the the only thing that has flow on effect. Basically everything has flow on effects. It's not "normally" 15%. It's 15% if you fall into particular criteria. If you are not within the particular criteria you do not qualify for that tax rate. Why do we have it like this? Because the criteria mandates your investment be in domestic companies - thus the money is used to spur the economy. You raise the tax rate and you thusly decrease investment in the U.S. economy (not specifically responding to you, especially since you aren't apparently in the U.S.). Almost all tax breaks or incentives exist so that investment gets pumped into the American economy rather than overseas. Actually, all long term capital gains are taxed at 15%, the only criteria is that it meets the definition of a "capital gain". There's already natural incentive to keep investments in the US because you have to pay both foreign and US tax on foreign investments,effectively getting double taxed. There are things that help offset this, like foreign tax credits, but the rules are complex (depending on the country) and it doesn't always work out ideally. The 15% rate is really designed to just help corporations and wealthy invidivuals to maximize their profits, it's not designed as an incentive to invest only domestically. The low rate is also there to help offset the risk of making investments, in that you can just as easily lose a ton of money, so you get rewarded for taking the risk with a lower tax rate. In a lot of situations when you make money from a foreign country and take that money into the US it's considered a dividend or ordinary income so it does get taxed at a different rate, but again if it's considered a long term capital gain the rate is 15%, period.
Tax breaks and incentives exist for a huge number of reasons, to encourage or discourage consumer economic activity (mortage examptions, excise taxes), to encourage industries (food subsidies), and to do things like encourage domestic investment. The Capital Gains tax is arguably too low, in addition to encouraging domestic investment it encourages dividend payment over reinvestment in the company itself through PPE or other asset purchases. Reducing the corporate tax rate also encourages domestic investment by allowing companies to keep more of their earning and make larger investments or dividend payments. Capital gains reductions encourages activity other than just investment by potential shareholders.
The capital gains tax is designed to do lots of things, like raise money for the government. investments should, pretty reliably make money, if they didnt our economy would have even more serious problems. If you are making investments that you are as likely to lose as make money on you better not be putting all your money into it.
The 15% rate is also only for "long term" gains, capital gains from assets held for one year or less is taxed as ordinary income, long term is as relevant as being capital gains to be eligible for that rate, it needs to be somewhat longterm investment.
Also @Fabled Integral: Nominal and Normal are totally different things I think you misread a line there.
|
|
|
|
|
|
EPT
