Seattle Times Fact Check Article:

Taxes

Now fer cryin' out loud, Mr. MartyMoose from Marysville, what are you doing? We don't need no stinkin' facts.

TJ needs a remedial math class.

using guilt to get people to give away what they worked for is the basis for the Tea Party book "Underdogma". just sayin...

Well, calling it "guilt" is certainly a more effective political phrase than calling it "having a conscience".

Just sayin'.

yes, since taxing capital gain income is not double taxation.

if i invest $1000 after tax dollars in XYZ stock and then sell it for $1500, i would pay tax on the $500 in capital gain, not on the initial $1000 investment. therefore it is not double taxation.

again, why should the cop pay a higher rate than the trustifarian he arrests?

double taxation, what a load of shite!

i don't want to see confiscatory tax rates on any income group, but taxing unearned income the same as earned income is fairer than any fair tax plan being proposed.

Well hell, lost track of the thread and what the ?????????????? MM is posting links to facts about taxes? What on ever is this world coming to? Next thing you know the Libs will have to fess up that BO is a piece of Chicago crap that seldom lets truth stand in his way. Damn, just plain damn!!!!!!

SG

I take it you have never paid CG?


"One other peculiar aspect of the capital gains tax has made many economists conclude that it is economically inefficient: it is a form of double taxation on capital formation. Economists Victor Canto and Harvey Hirschorn explained:

A government can choose to tax either the value of an asset or its yield, but it should not tax both. Capital gains are literally the appreciation in the value of an existing asset. Any appreciation reflects merely an increase in the after-tax rate of return on the asset. The taxes implicit in the asset’s after-tax earnings are already fully reflected in the asset’s price or change in price. Any additional tax is strictly double taxation.6

Take, for example, the capital gains tax paid on a pharmaceutical stock. The value of that stock equals the discounted present value of all of the company’s future proceeds. If the company is expected to earn $100,000 a year for the next twenty years, the sales price of the stock will reflect those returns. The “gain” the seller realizes from the sale of the stock will reflect those future returns, and thus the seller will pay capital gains tax on the future stream of income. But the company’s future $100,000 annual returns will also be taxed when they are earned. So the $100,000 in profits is taxed twice—when the owners sell their shares of stock and when the company actually earns the income. That is why many tax analysts argue that the most equitable rate of tax on capital gains is zero.7"

http://www.econlib.org/library/Enc/CapitalGainsTaxes.html

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So I should be exempt from paying taxes because my salary is simply an appreciation of my education and experience.

This statement refutes their own argument:

"The taxes implicit in the asset’s after-tax earnings are already fully reflected in the asset’s price or change in price."

In other words when you purchased the "asset" it was known to you that any appreciation was taxable and therefore inherant in the price you paid and when sold you are well aware that gains are taxed and, to your benefit, losses are deductable. Using their argument against them would mean:

You pay $10 for a share knowing if it appreciates 10% you will owe $.15 in tax. On the other hand if you knew at the time of purchase that no taxes would be owed then you may be willing to pay $11 for a share.

BTW, earnings (future returns) are not doled out to shareholders. Maybe you mean dividends?

Most economists accept the reason for the dividend tax rate being ONLY 15% is because the tax burden is being shared between the Corp and the shareholder. However we all know that most large corps pay little to no tax. And the uber rich can live off of dividends and pay a substantially lower tax rate than the rest of America.

Vic and Harv are a couple of assclowns.

Their argument wouldn't hold water in a 200-level econ class.

But as long as their opinion validates some other assgoblin's argument, it will get bantied about like it actually means something.

This is an assumption with no basis in fact, or reality.

Fish on...

Todd

total load of crap. the companies profits are not tied to a stock price as rigidly as your make believe example. the profit from the company and the market for ownership of the company are two entirely separate entities and the price for a share of the company can be far more volatile than the companies profits. stocks are sold by companies to raise capital, and then the stocks are publicly traded on markets which have zero bearing on the company. the company can make tons of money and their stock price can be depressed and vice-versa.

i'll use a real life example. during the bird flu scare a few years back, stocks of chicken producing corporations were knocked down severely by scares of bird flu. the companies profits were not impacted, but fear ruled. if you purchased during the fear you made a profit that was not tied to the companies economic fundamentals at all. the company pays taxes on their profits, which have zero bearing on when and if people sell shares and accrue capital gains.

the market is independent of the corporations when it comes to the price of the stocks.

your comparison is like stating there should be no taxes on casino winnings because the casino pays taxes on their profits.

Sounds like the class is caught up in a battle of ideology and semantics fueled by belief dependant realism. I doubt most of you will ever wear the shoes of a heavy CG tax burden. Sometimes a different pair of shoes changes your outlook on life.

what heavy capital gains burden? would that be the current 15% or the 20% if the bush tax cuts expire?

my thinking is that income is income. unearned or earned doesn't matter.

also, you might be surprised by the shoes some of us walk in. i don't know your situation and you certainly don't know mine.

i don't presume that the people supporting low rates on unearned income are top 1%'s or derive their primary income from unearned income. i think you and they are wrong, but i wouldn't presume anything about your financial situation.

but you are certainly full of crap when you try to put a company paying taxes on their profits and people selling stock in that same company as double taxation. total 100% bullcrap and you know it.

TW, I don't care what your situation is ignorance is ignorance.

"what heavy capital gains burden? would that be the current 15% or the 20% if the bush tax cuts expire"

A company makes $100 profit. It pays 35% in income tax it can only disribute $65 to shareholders in dividend or capital gains. If as a dividend it is taxed at your individual rate or when you sell your stock you are taxed an additional 15%. Its a double tax period end of story.

DanS prefers to shoot the messenger with no corroboration so here is two, one from the left and the right. Argue with them.



"Nobel prize winning economist Milton Friedman first recognized the inequity in double taxation in his book Capitalism and Freedom (The University of Chicago Press, 1962) and wrote about it in Free To Choose (Harcourt, 1990). He wrote,

“The corporate income tax, too, is highly defective. It is a hidden tax that the public pays in the prices it pays for goods and services without realizing it. It constitutes double taxation of corporate income—once to the corporation, once to the shareholder when the income is distributed. It penalizes capital investment and thereby hinders growth in productivity. It should be abolished.”

And recently in his book, Supercapitalism (Random House, 2007), Robert Reich came to the same conclusion:

“In reality, the corporate income tax is paid—indirectly—by the company’s consumers, shareholders, and employees.”, and concludes that “Abolishing the corporate income tax would … help capital markets work better.”

Reich extends his analysis and observes because corporations are not people they should not be afforded the opportunity to challenge laws in courts, nor to lobby government, and should be denied other rights and privileges reserved for citizens. Subsidizing corporations would be unnecessary without a corporate tax. And in this age of bailout-mania, eliminating the business tax would reduce or obviate the need for Washington to rescue companies with taxpayer money.

By ending double taxation, we will create an environment of capital formation, and with it business growth without the need for stimulus, bailout, subsidy, tax credit, tax deduction, tax loophole, or other gimmicks. We believe this is the way we can make our economy strong—permanently strong—and competitive, without deficits, Federal borrowing, and increased taxation.

Friedman-Reich will make unnecessary:

- bailouts
- stimulus packages
- tax loopholes
- government subsidies
- capital gains taxes
- corporate lobbying

Friedman-Reich will:

- attract capital to business
- make companies more competitive in the world economy
- halt layoffs and increase employment
- keep jobs here
- increase the value of retirement and other savings accounts
- make capital markets more efficient and relieve the credit choke
- ultimately increase government tax revenue

There is no better time to consider this proposal. We have an economy that needs revitalization, a new President who has called for bi-partisan ideas, and a breakthrough concept with support from both sides of the political spectrum. This is an idea started by a conservative and advanced by liberals. And Mr. Reich is an advisor to President-elect Obama. We believe we have therefore, at this moment, the perfect storm to advance a proposal that would redress systemic disadvantages our tax system imposes on businesses and capital markets, precisely at the time when both need help."

"A company makes $100 profit. It pays 35% in income tax it can only disribute $65 to shareholders in dividend or capital gains. If as a dividend it is taxed at your individual rate or when you sell your stock you are taxed an additional 15%. Its a double tax period end of story. "

A company does not distribute anything in "capital gains".

"dividend it is taxed at your individual rate"

Dividends are taxed at 15% regardless of your individual rate.

When you sell your stock you are taxed 15% on any gains you achieved. No double taxation for you.

You are really proving you know nothing about corps, taxes, the stock market or investing.

I would also like you to find us a US corporation that pay's a 35% tax.

Friedman? Are you joking? You are a more than a RWWJ you are a neocon.

IRS tax topic 404

"Ordinary dividends are taxable as ordinary income unless they are qualified dividends. Qualified dividends are ordinary dividends that meet the requirements to be taxed as net capital gains."


You are really proving you know nothing about corps, taxes, the stock market or investing.

Now you are mixing short term investing versus long term investing. Short term capital gains and dividends are taxed as ordinary income. Long term, held more than 12 months, capital gains AND dividends are taxed at 15%. Spoon it in, chew well and then swallow.

A good documentary for you to watch is The Shock Doctrine. Maybe one of your neighbors has a tv and dvd player they'll let you use. You'll need lots of tin foil to keep your head from exploding though.