Obama proposes tax hikes on wealthy, Capital Gains tax hikes that will likely backfire as usual

[Katzndogz]

And his proposed tax increases on "the wealthy" will probably result in slowing of job growth or even decreases in job production as large employers have less money to spend on wages and personnel, adding to their increased burdens imposed by Obamacare.

Capital gains is on stock speculation. If you say, buy microsoft for 70 and sell it for 100, the increase is taxed at a rate of 15%. Often less than half of the rate that actual income is taxed.

How then would it effect job production?

You do realize that when someone sells something they plan on spending the proceeds right?

The same would be true if you say, sold a good or service. Why then does capital gains enjoy such an inexplicably entitled status with such a dramatically lower rate than that paid for ordinary income? You know....labor that actually produces a good or service rather than simply shifting money around between speculators?

By any logical standard, ordinary income would enjoy that preferred lower tax level as it actually benefits the economy in a meaningful way and produces goods and services. While stock speculation produces nothing, enhances nothing, improves nothing, provides no service, makes no good.

Which is why Obama's plan to cut taxes on ordinary income for the middle class while raising it on capital gains makes so much sense. Its completely reasonable, logical, and actually benefits the economy.

Capital gains taxes are low to encourage investors to take their profit. They take it and spend it. High taxes on capital gains encourages people to leave their investment . That's why obumble's plan makes no sense and why tax revenues go down every time capital gains taxes are high.

Of course investment produces a great deal. It provides working capital for business to expand, hire more people, invent new things and make more goods. The company makes more money and pays the investors back with interest called dividends.

Raise taxes on capital gains and watch tax revenue go to the basement. Investors just won't take their profit. Whatever they intended to do with that profit just won't be done. The investment and the money that investment generated will just sit there untaxed. There will be no reason for any new investor to take the risk of investment. The money is so heavily taxed he will get the same effect if he flushed it down the toilet.

Then the economy stagnates.

 

[2aguy]

"Obama proposes tax hikes on wealthy, Capital Gains tax hikes that will likely backfire as usual"

No more unwarranted than tax cuts for the wealthy, which have in fact consistently backfired.

Uh...no.....

 

[2aguy]

This is a nice look at what the tax increases would actually do....

Obama declares war on the middle class RedState

5. Tax Increases in Retirement Plans and a New Employer Mandate

There would be a new cap in the amount one could accumulate in the aggregate in all IRA and 401(k) type accounts of $3.4 million. After that, you can’t save any more new dollars. The idea is that this is enough to secure a $210,000 annual distribution in retirement, which the government apparently deems “enough” for a retiree.

In addition, all employers with more than 10 workers and who do not have a 401(k) type plan would be mandated to set up payroll deduction Traditional IRAs for their employees. Also, part-time workers would have to be covered under retirement plans if they have been working someplace long enough. These two things are a new kind of employer mandate from Obama.

Like the “Cadillac” health plans, this is a Trojan horse designed to destroy private retirement plans. $3.4 million is not a lot of money to save over a lifetime and with inflation it will shrink steadily and bring more plans under government control.

at what point did people think it was okay for greedy, corrupt, criminal politicians to decide how much is enough for peoples retirement income....I don't exactly see them giving back their federal pension money......

 

[HenryBHough]

Intended to be DOA.

Nothing to see here.....move along......

 

[Skylar]

Capital gains taxes are low to encourage investors to take their profit. They take it and spend it. High taxes on capital gains encourages people to leave their investment . That's why obumble's plan makes no sense and why tax revenues go down every time capital gains taxes are high.

When Reagan increased capital gains taxes from 15 to 22%, federal revenues jumped by 11%.

Federal revenues increased every year of Clinton's presidency. Despite Clinton raising Capital gains to a maximum of 25%.

So if increasing capital gains taxes sends tax revenues lower......why didn't it? Not during Reagan. Not during Clinton.

Of course investment produces a great deal. It provides working capital for business to expand, hire more people, invent new things and make more goods. The company makes more money and pays the investors back with interest called dividends.

But stock speculation doesn't provide a penny of working capital. If you skim a fraction of a penny several times a second off of the tiny fluctuations in market value of a stock.......you're not actual benefiting the company nor transferring a penny into their coffers. You're simply giving money to or taking money from another speculator.

You provide no service. You produce no good. You improve nothing. You invent nothing. You don't grow the economy in any meaningful way.

With more than 99% of all stock transactions done by hedge funds and that last 1% for all the rest of us, why do we maintain this cherry, super low tax rate for the Hedge Funds.....while taxing actual increases from actual labor that builds products and provides services does grow the economy at a hire rate?

Why not tax capital gains like we would any other form of income. Exactly as it was done for decades before Bush gave it a special tax rate.

Raise taxes on capital gains and watch tax revenue go to the basement.

History says otherwise. Both of the recent increases in capital gains taxes were followed by significant revenue increases. Exactly the opposite of what you predicted would happen.

Investors just won't take their profit. Whatever they intended to do with that profit just won't be done.

Except that they do. And in hedge funds almost all money is put back into the stock market.

The investment and the money that investment generated will just sit there untaxed. There will be no reason for any new investor to take the risk of investment. The money is so heavily taxed he will get the same effect if he flushed it down the toilet.

Sure there is; Profit. The difference in capital gains rate proposed by the president is at most, about 4.2%. The idea that investors won't invest any more over 4.2% is ludicrous and contradicted by history to an almost absurd degree. Of course they will.

And they have, when the capital gains rates were significantly higher.

 

[Skylar]

This is a nice look at what the tax increases would actually do....

Obama declares war on the middle class RedState

5. Tax Increases in Retirement Plans and a New Employer Mandate

There would be a new cap in the amount one could accumulate in the aggregate in all IRA and 401(k) type accounts of $3.4 million. After that, you can’t save any more new dollars. The idea is that this is enough to secure a $210,000 annual distribution in retirement, which the government apparently deems “enough” for a retiree.

In addition, all employers with more than 10 workers and who do not have a 401(k) type plan would be mandated to set up payroll deduction Traditional IRAs for their employees. Also, part-time workers would have to be covered under retirement plans if they have been working someplace long enough. These two things are a new kind of employer mandate from Obama.

Like the “Cadillac” health plans, this is a Trojan horse designed to destroy private retirement plans. $3.4 million is not a lot of money to save over a lifetime and with inflation it will shrink steadily and bring more plans under government control.

Um, what? In what universe is a 3.4 million dollar IRA 'middle class'?

C'mon....even conservatives have to call bullshit on that one

 

[Rozman]

This proposal by Obama will go nowhere....
So why is gonna do it?

 

[HenryBHough]

Remember how the income tax was only ever going to be assessed on huge incomes?

And at miniscule rates?

If this scheme passes rush out and buy Vaseline while there's some on the shelves.

 

[Siete]

I say the OP is a dope, and so is ANYONE who agrees with him.

The American Taxpayer Relief Act of 2012 (ATRA)[1] , which President Obama signed into law last night, makes permanent 82 percent of President Bush’s tax cuts.

The Joint Committee on Taxation (JCT) and Congressional Budget Office estimate that making permanent all of the Bush tax cuts would have cost $3.4 trillion over 2013-2022.[2]

That’s the price tag for making permanent:

1. all of the income, capital gains, and dividends tax cuts first enacted under President Bush;
2. the estate tax at the levels that it was at in 2012; and
3. the increase in the cost of “patching” the Alternative Minimum Tax (AMT), caused by the other Bush tax cuts, to ensure that more middle-income taxpayers are not subject to the AMT. The other Bush tax cuts threw more taxpayers onto the AMT. That increased the cost of indexing the AMT parameters for inflation. (Otherwise, the AMT would have cancelled out much of the value of the other Bush tax cuts.[3] The $3.4 trillion does not include the cost of indexing the AMT for inflation that would have existed even without the Bush tax cuts.)

JCT estimates show that ATRA makes all but $624 billion of those $3.4 trillion in tax cuts permanent.[4] It thus makes permanent 82 percent of the Bush tax cuts, while letting 18 percent expire.

Here’s the 18 percent of the Bush tax cuts allowed to expire:

1. $453 billion over ten years comes from the expiration of cuts to the income, capital gains, and dividend tax rates for filers with taxable income above $450,000 for married couples and $400,000 for singles. These filers retain the full Bush tax-rate cuts on their first $450,000 (or $400,000) of taxable income. (Note: the taxable income thresholds of $400,000 and $450,000 translate into significantly higher threshold amounts for adjusted gross income — that is, the income before taxpayers take advantage of the credits, deductions, and other tax preferences to which they’re entitled.)
2. $152 billion comes from allowing limits on personal exemptions and itemized deductions (the so-called Pease and PEP provisions) to return for filers with adjusted gross income above $300,000 for married couples and $250,000 for singles.
3. $19 billion comes from raising the estate tax rate to 40 percent, from the 35 percent rate in place in 2012. The exemption amount — the value of an estate that is not subject to the estate tax — will be $5.2 million for individuals and $10.4 million for couples in 2013, with the exemption amounts rising with inflation in future years. (By comparison, returning the estate tax to its 2009 parameters of 45 percent, with a $7 million per couple exemption, would have saved $137 billion; thus, relative to the 2009 parameters, $118 billion in revenue was lost.)

zzzzzzzzzzzzzzzzzz

 

[Skylar]

This proposal by Obama will go nowhere....
So why is gonna do it?

A clear demonstration of the differences of the parties would be an excellent reason why. Democrats investing in education and tax cuts for the middle class. Republicans trying to preserve an absurdly low tax rate for capital gains that overwhelmingly benefits the wealthy.

It demonstrates priorities and the initiative of a plan. While republicans can be cast as remain a reactionary party catering to the wealthy.

 

[Skylar]

Remember how the income tax was only ever going to be assessed on huge incomes?

And at miniscule rates?

If this scheme passes rush out and buy Vaseline while there's some on the shelves.

No. And neither do you.