Also, it’s a de-facto regressive tax. And although I generally disapprove of using taxes as a tool of social policy, I do agree with the theory of progressive taxation. (Maybe not as progressive as it is now, where 47% of people pay nothing and the top 10% pay 90% of the tax.)
^Sounds about right
Just prior to President Obama’s 2014 State of the Union Address, media[4] reported that the top wealthiest 1% possess 40% of the nation’s wealth; the bottom 80% own 7%; similarly, but later, the media reported, the “richest 1 percent in the United States now own more additional income than the bottom 90 percent”.[5]
https://en.wikipedia.org/wiki/Wealth_inequality_in_the_United_States
Tax policy isn’t progressive enough. A billionaire can park his wealth in dividend paying stocks, MLPs and munis and pay less as a percentage of his income than muggles. Should just tax all investment income at current tax bracket.
But presumably, he was already taxed at a high bracket on the income it took to become a billionaire in the first place. Otherwise, he would be a double billionaire. In other words, his dividends have already been taxed at some point, in the form of lost potential for even more dividend income.
It’s not double taxation, he is reinvesting that money and generating new money, and that should be open for taxation. This isn’t a Roth IRA. Or worse, somebody like Steve Ballmer can collect $500M/y through dividends alone without being taxed on the original capital (unrealized gains).
Let’s say you earn $1 million, and buy stock that yields 2% in dividends.
If you had zero income tax originally, you would earn $20k in dividend income. If you had 50% income tax originally, you would own $500k stock and earn $10k in dividend income.
How is it possible to argue that the original income tax did not affect your dividend income?
I did not argue the original tax didn’t affect your dividend income.
The $10k difference in dividend income is still lost to “tax” though. That is what I am saying. The base case is $20k of future income. If some Black Box financial rule is applied that results in you being entitled to only half of that (the rest being taken bu the government in some form), that sounds like a tax to me.
It is lost to tax, but it is not double taxation. It would be double taxation if the principal amount of his investment was subject to more tax.
A: Takes home $100k/y after tax, spends it on bidets and watches
B: Takes home $100k/y after tax, invests it to generate $40k/y of dividends.
Who has higher income? Businesses use-after tax retained earnings to invest and generate more profit, but that new profit isn’t “tax free” just because the principal was post-tax.
^ First, you’re arguing semantics.
Second, why shouldn’t B get some form of preferred tax treatment? Because he’s smarter, wiser, and more patient? Preferred tax rates provide an incentive for people to save and put money back into the capital markets.
Third, you just made Ohai’s point. The new profit isn’t tax-free. People who invest in dividend-paying stocks (be they private or public) pay tax twice–once when the corporation earns money, and again when they take money out of the corporation. So to have the use of your money, you must pay tax twice. If this isn’t double taxation, I don’t know what is.
whether he was taxed on it already doesn’t matter. the rich guy has excessive amounts if taxable investment income while the poor guy has none. extreme levels of generational wealth is inevitable when you have low/no estate taxes and/or low or no investment income taxes.
imo, only a low tax rate on very long-term capital gains makes sense to stimulate small business and startup investment.
Do you really think they’re paying less in taxes than we are, or do you mean that their (respective) effective tax rates are lower?
In others words: “IT’S NOT FAIR!”
Are you being intentionally pedantic because you love DT or because you are just obnoxious? You know damn well he means effective rates. Jesus christ things like this make me hate the internet.
Take it easy Yay. Some people really don’t know.
apologies. I suppose the comment has some merit based on the tiny amount of debate recap I saw HRC claimed DT didnt pay any federal income taxes in the last returns he released. No clue if its true or not and dont put too much weight on what she says but if true I suppose in absolute terms anyone who paid any federal income tax paid more than DT. But again it was an HRC talking point at a debate so I cant imagine its too accurate.
^I, for one, really don’t know. A lot has been made of the fact that Donald Trump didn’t pay any income tax in some years. And that’s an absolute amount–not a tax rate.
Note - I don’t love DT and I’m not intentionally being obnoxious. The phrase was pretty ambiguous.
So low level. Especially for a charterholder. If I own nothing but munis, who gets the tax break? Do I experience the burden of taxation? Think long and hard. For you, it probably is a trick question…And if the income tax on truck drivers is increased, who ultimately pays the increased tax?
yes, it is not fair when labour is taxed at a higher rate than capital. further, governments pay for capital to be deployed and labour always comes indirectly. economic growth would be much better if dormant private capital was transferred to labour. stop thinking of the rich versus the poor. starting thinking of humans versus capital.
What is the incentive to accumulate capital if it is only to be redistributed? Altruism?