Should we abolish the capital gains tax?

[editec]

I think a lot of you would be very surprised at how many middle class people actually do invest. It's not just for rich people.

Do you have a point?

Yeah. Some of you seem to think raising the capital gains tax is like a nice little spanking for rich people, to fill the budget. You can't spank rich people without spanking the middle class. The sooner you realize that the better off you'll be.

I don't think any of us think that.

I definitely do think you think we do, despite the fact that most of us discussing this issue come to the discussion armed with fact and tell you something entirely different than what you ascribe to us.

So we're not responsible for the flawed thinking of the strawmen you would like to be debating.

I'm sorry but you're pretty much stuck debating with people who are not the liberal know-nothing caractures you claim we all are.

 

[Ravi]

Mani's often wrong, but that isn't pertinent.

Spanking the rich has nothing to do with it. Taxing capital gains at a rate different than any other income is wrong...doesn't matter who is earning the capital gains. Income is income.

Seems to me a libertarian would agree with this.

 

[Paulie]

Mani's often wrong, but that isn't pertinent.

Spanking the rich has nothing to do with it. Taxing capital gains at a rate different than any other income is wrong...doesn't matter who is earning the capital gains. Income is income.

Seems to me a libertarian would agree with this.

No, a libertarian would be happy with any tax rate being lower.

A libertarian wouldn't advocate raising a tax just to match another tax. Capital gains income is derived from risk, whereas labor income is secure and guaranteed so long as you're employed. Assuming guaranteed employment, labor income is steady while capital gains income is still based on risk. Someone willing to take that risk to capitalize a business ought to be taxed less on their subsequent income for doing so.

How you could form a parallel between the two is beyond me.

 

[Ravi]

Mani's often wrong, but that isn't pertinent.

Spanking the rich has nothing to do with it. Taxing capital gains at a rate different than any other income is wrong...doesn't matter who is earning the capital gains. Income is income.

Seems to me a libertarian would agree with this.

No, a libertarian would be happy with any tax rate being lower.

A libertarian wouldn't advocate raising a tax just to match another tax. Capital gains income is derived from risk, whereas labor income is secure and guaranteed so long as you're employed. Assuming guaranteed employment, labor income is steady while capital gains income is still based on risk. Someone willing to take that risk to capitalize a business ought to be taxed less on their subsequent income for doing so.

How you could form a parallel between the two is beyond me.

There is no such thing as guaranteed employment, for one. You act like choosing a career or picking a place of employment is risk free. It isn't. Everything anyone does to make income is risky. I've no problem with all income being treated the same and taxed at the same rate, speaking as someone willing to take the risk of capitalizing a business.

 

[Valerie]

Mani's often wrong, but that isn't pertinent.

Spanking the rich has nothing to do with it. Taxing capital gains at a rate different than any other income is wrong...doesn't matter who is earning the capital gains. Income is income.

Seems to me a libertarian would agree with this.

No, a libertarian would be happy with any tax rate being lower.

A libertarian wouldn't advocate raising a tax just to match another tax. Capital gains income is derived from risk, whereas labor income is secure and guaranteed so long as you're employed. Assuming guaranteed employment, labor income is steady while capital gains income is still based on risk. Someone willing to take that risk to capitalize a business ought to be taxed less on their subsequent income for doing so.

How you could form a parallel between the two is beyond me.

I think you make a good point, Paulie. Capital gains do come from taking a risk and they probably should be treated differently. After all, if we discourage people from taking risks with their capital, where would we be in terms of growth? Maybe there should be a certain amount above the cost basis they could consider a standard deduction and tax the amount that goes over. I couldn't even begin to come up with a fair number, but the idea isn't a bad one.

 

[Care4all]

I think a lot of you would be very surprised at how many middle class people actually do invest. It's not just for rich people.

Do you have a point?

Yeah. Some of you seem to think raising the capital gains tax is like a nice little spanking for rich people, to fill the budget. You can't spank rich people without spanking the middle class. The sooner you realize that the better off you'll be.

ummmmm Paul, MOST of the middle class IS NOT invested in the Stock Market, OTHER than in their own 401k's....

Don't know if you realize it or not, but 401k's are not taxed at capital gains rates when we begin to withdraw on them....they are taxed at earned income rates, even if it was all invested in the stock market......nor can we take a Capital Loss is my understanding on pretax 401k's....

So when they lower the capital gains rate, and even though more than 50% of middle America is invested in the stock market....those investment, within our 401k's, are not affected, what so ever, with this kind of tax reduction.....we NEVER GET IT, our 401k's are taxed at income tax rates.

care

 

[Ravi]

Do you have a point?

Yeah. Some of you seem to think raising the capital gains tax is like a nice little spanking for rich people, to fill the budget. You can't spank rich people without spanking the middle class. The sooner you realize that the better off you'll be.

ummmmm Paul, MOST of the middle class IS NOT invested in the Stock Market, OTHER than in their own 401k's....

Don't know if you realize it or not, but 401k's are not taxed at capital gains rates when we begin to withdraw on them....they are taxed at earned income rates, even if it was all invested in the stock market......nor can we take a Capital Loss is my understanding on pretax 401k's....

So when they lower the capital gains rate, and even though more than 50% of middle America is invested in the stock market....those investment, within our 401k's, are not affected, what so ever, with this kind of tax reduction.....we NEVER GET IT, our 401k's are taxed at income tax rates.

care

So we are subsidizing the speculators. Interesting.

 

[Care4all]

Yeah. Some of you seem to think raising the capital gains tax is like a nice little spanking for rich people, to fill the budget. You can't spank rich people without spanking the middle class. The sooner you realize that the better off you'll be.

ummmmm Paul, MOST of the middle class IS NOT invested in the Stock Market, OTHER than in their own 401k's....

Don't know if you realize it or not, but 401k's are not taxed at capital gains rates when we begin to withdraw on them....they are taxed at earned income rates, even if it was all invested in the stock market......nor can we take a Capital Loss is my understanding on pretax 401k's....

So when they lower the capital gains rate, and even though more than 50% of middle America is invested in the stock market....those investment, within our 401k's, are not affected, what so ever, with this kind of tax reduction.....we NEVER GET IT, our 401k's are taxed at income tax rates.

care

So we are subsidizing the speculators. Interesting.

This whole thing on Capital gains really pisses me off....especially when I hear Republican Politicians speak before the Public, saying why capital gains tax reduction is such a good idea and how MORE THAN HALF OF MIDDLE AMERICA is invested in the stock market, implying that all of us would benefit with a capital gains tax reduction, when they KNOW that our investments in the stock market are within our 401k's, and THEY KNOW that 401k's are never subject to a capital gains tax in the first place....makes me want to jump through the tv screen and give the suckers a good 1-2 punch in the schnauzer!

care

 

[Care4all]

I should correct myself in saying that i worded it wrong on 50% of America invested in 401ks in the stock market, it should be.... the investers in more than 50% of the stock market are investors that hold their investment, within a 401k.

 

[Paulie]

Mani's often wrong, but that isn't pertinent.

Spanking the rich has nothing to do with it. Taxing capital gains at a rate different than any other income is wrong...doesn't matter who is earning the capital gains. Income is income.

Seems to me a libertarian would agree with this.

No, a libertarian would be happy with any tax rate being lower.

A libertarian wouldn't advocate raising a tax just to match another tax. Capital gains income is derived from risk, whereas labor income is secure and guaranteed so long as you're employed. Assuming guaranteed employment, labor income is steady while capital gains income is still based on risk. Someone willing to take that risk to capitalize a business ought to be taxed less on their subsequent income for doing so.

How you could form a parallel between the two is beyond me.

I think you make a good point, Paulie. Capital gains do come from taking a risk and they probably should be treated differently. After all, if we discourage people from taking risks with their capital, where would we be in terms of growth? Maybe there should be a certain amount above the cost basis they could consider a standard deduction and tax the amount that goes over. I couldn't even begin to come up with a fair number, but the idea isn't a bad one.

This is what Ravi doesn't get. Of course she picked at something semantic she could argue. There doesn't have to be such a thing as guaranteed employement, but having a job and earning the income associated with it is not "risk". I only mentioned assumed guaranteed employment to make a point. Having and losing a job does not mean you took a risk, and it CERTAINLY doesn't mean you capitalized a business with your own money.

They are two completely different income streams and should be treated differently as such for tax purposes. Just becuase YOU don't mind paying it Rav, doesn't mean it makes any more sense.

 

[Ravi]

I should correct myself in saying that i worded it wrong on 50% of America invested in 401ks in the stock market, it should be.... the investers in more than 50% of the stock market are investors that hold their investment, within a 401k.

Thank you, Care. I'm embarrassed to admit that I didn't look at it like that. It certainly puts the kibosh on the tired line Valarie parroted above, that making capital gains tax the same as all other income taxes would discourage investors.

Bamboozled again by the right wing spin machine.

 

[manifold]

Hey Paulie,

Did you forget that you get to offset your capital gains with your losses?

 

[Valerie]

ummmmm Paul, MOST of the middle class IS NOT invested in the Stock Market, OTHER than in their own 401k's....

Don't know if you realize it or not, but 401k's are not taxed at capital gains rates when we begin to withdraw on them....they are taxed at earned income rates, even if it was all invested in the stock market......nor can we take a Capital Loss is my understanding on pretax 401k's....

So when they lower the capital gains rate, and even though more than 50% of middle America is invested in the stock market....those investment, within our 401k's, are not affected, what so ever, with this kind of tax reduction.....we NEVER GET IT, our 401k's are taxed at income tax rates.

care

So we are subsidizing the speculators. Interesting.

This whole thing on Capital gains really pisses me off....especially when I hear Republican Politicians speak before the Public, saying why capital gains tax reduction is such a good idea and how MORE THAN HALF OF MIDDLE AMERICA is invested in the stock market, implying that all of us would benefit with a capital gains tax reduction, when they KNOW that our investments in the stock market are within our 401k's, and THEY KNOW that 401k's are never subject to a capital gains tax in the first place....makes me want to jump through the tv screen and give the suckers a good 1-2 punch in the schnauzer!

care

You mean politicians are deliberately deceptive to their constituents?

Go Get 'em Care!

It can be equally upsetting when you realize some politicians don't even understand how it works and they're just repeating what someone else spouted...Just like someone did during the presidential campaign.

 

[Care4all]

I should correct myself in saying that i worded it wrong on 50% of America invested in 401ks in the stock market, it should be.... the investers in more than 50% of the stock market are investors that hold their investment, within a 401k.

Thank you, Care. I'm embarrassed to admit that I didn't look at it like that. It certainly puts the kibosh on the tired line Valarie parroted above, that making capital gains tax the same as all other income taxes would discourage investors.

Bamboozled again by the right wing spin machine.

well, i thought valerie was accepting Paul's point of view on this, but she also offered a compromise, maybe for the first X amount of capital gains ...is taxed at earned income rates and then after a certain point taxed at a lower captial gains tax rate....

if the first X amount of capital gains is taxed at earned income rates, that would at least subject these people to the same tax rate that we would be taxed for our 401k's when we withdraw it, for SOME of their gains...thus, a compromise....

 

[Ravi]

I should correct myself in saying that i worded it wrong on 50% of America invested in 401ks in the stock market, it should be.... the investers in more than 50% of the stock market are investors that hold their investment, within a 401k.

Thank you, Care. I'm embarrassed to admit that I didn't look at it like that. It certainly puts the kibosh on the tired line Valarie parroted above, that making capital gains tax the same as all other income taxes would discourage investors.

Bamboozled again by the right wing spin machine.

well, i thought valerie was accepting Paul's point of view on this, but she also offered a compromise, maybe for the first X amount of capital gains ...is taxed at earned income rates and then after a certain point taxed at a lower captial gains tax rate....

if the first X amount of capital gains is taxed at earned income rates, that would at least subject these people to the same tax rate that we would be taxed for our 401k's when we withdraw it, for SOME of their gains...thus, a compromise....

Why not use the same progressive scale we use for income tax?

 

[Paulie]

Hey Paulie,

Did you forget that you get to offset your capital gains with your losses?

Of course not. But you don't get to write off every dollar lost against your gains, and if you don't lose anything, then you aren't offsetting anything.

And Rav, how could you not think that a raise in the capital gains tax would discourage investing? It doesn't have to discourage ALL investing for it to be a negative.

The economy isn't going to turn around until the market improves, because these companies are hurting for capital. The securities market rebounding typically precludes the economy rebounding. We need investors to see a good reason to invest. There's zillions of dollars just sitting around in cash right now not doing a god damn thing, except maybe inflating gold. What good is that doing the economy?

 

[Ravi]

Can I offset my college education because I chose a different career path? Yeah, no risk there, eh? LOL!

Lots of people are investing now, buying low...right Pauli?

If you know in advance what your tax rate is you aren't going to be discouraged from investing because you will still make a profit if the market goes up...even taxed at the same rate as regular income tax.

What else are you going to do with your money, Pauli? Put it in the bank?

 

[Care4all]

Thank you, Care. I'm embarrassed to admit that I didn't look at it like that. It certainly puts the kibosh on the tired line Valarie parroted above, that making capital gains tax the same as all other income taxes would discourage investors.

Bamboozled again by the right wing spin machine.

well, i thought valerie was accepting Paul's point of view on this, but she also offered a compromise, maybe for the first X amount of capital gains ...is taxed at earned income rates and then after a certain point taxed at a lower captial gains tax rate....

if the first X amount of capital gains is taxed at earned income rates, that would at least subject these people to the same tax rate that we would be taxed for our 401k's when we withdraw it, for SOME of their gains...thus, a compromise....

Why not use the same progressive scale we use for income tax?

BECAUSE it would never pass congress...Dems are yellowbellies and they will let the republican jargon on this ....''middle america being invested in the market'' and ''Dems want to raise taxes on middle america" spin and propaganda....would scare the pajesus out of the Dems and they would cowar....

I have only heard less than a handful of Dems counter this republican jargon well....they are as ill informed as the rest of the bunch, otherwise more than a handful it seems, would be touting this from the roof tops so that "we the people" understood our own tax predicament with our 401k's ....no capital gains or loss benefits.

I agree, they SHOULD be taxed at the same rate as earned income as more than 50% of the people invested in the stock market are taxed at....who are also taking risks.

care

 

[Ravi]

well, i thought valerie was accepting Paul's point of view on this, but she also offered a compromise, maybe for the first X amount of capital gains ...is taxed at earned income rates and then after a certain point taxed at a lower captial gains tax rate....

if the first X amount of capital gains is taxed at earned income rates, that would at least subject these people to the same tax rate that we would be taxed for our 401k's when we withdraw it, for SOME of their gains...thus, a compromise....

Why not use the same progressive scale we use for income tax?

BECAUSE it would never pass congress...Dems are yellowbellies and they will let the republican jargon on this ....''middle america being invested in the market'' and ''Dems want to raise taxes on middle america" spin and propaganda....would scare the pajesus out of the Dems and they would cowar....

I have only heard less than a handful of Dems counter this republican jargon well....they are as ill informed as the rest of the bunch, otherwise more than a handful it seems, would be touting this from the roof tops so that "we the people" understood our own tax predicament with our 401k's ....no capital gains or loss benefits.

I agree, they SHOULD be taxed at the same rate as earned income as more than 50% of the people invested in the stock market are taxed at....who are also taking risks.

care

Sigh. You're probably right about the Dems being cowards. I think I'll write to my Dems and see what they think about the subject.

 

[Valerie]

I should correct myself in saying that i worded it wrong on 50% of America invested in 401ks in the stock market, it should be.... the investers in more than 50% of the stock market are investors that hold their investment, within a 401k.

Thank you, Care. I'm embarrassed to admit that I didn't look at it like that. It certainly puts the kibosh on the tired line Valarie parroted above, that making capital gains tax the same as all other income taxes would discourage investors.

Bamboozled again by the right wing spin machine.

Not exactly, Ravi.

I think for myself and I'm not "right wing". You seem to be bamboozled by the idea that all things in America are either right or left. I know it's easier to just label people, but things tend to be more complicated than that. BTW, there are different types of capital gains to consider besides the stock market. The issue is trying to find the proper balance, not pointing fingers at investors.

I found some good info about capital gains rates here:

Capital gains tax rates -- how to know which capital gain rate you will pay (Page 1 of 2)

More rate changes to come?
Both the 15 percent and zero percent rates are scheduled to be in effect only through 2010. If Congress does not extend them, the rates will return to the prior 20 percent and 10 percent levels.

Given the economy and the new political makeup in Washington, D.C., it is not clear how lawmakers will deal with the lower capital gains rates. They could let them run their course and expire at the end of 2010. But they also could decide to end both rates early or keep just one lower rate but not the other.

With Congress continually tweaking investment tax laws, what's an investor to do? Most financial experts say to take advantage of today's lower rates while they are around and when they fit into your portfolio plans.

But don't forget about the ultimate Dec. 31, 2010, deadline. And definitely keep an eye on federal tax-law writers in the interim.