Jayford, Much of what you say is true: I espiecally agree with the excessive military spending part. Why is the capital gains preference tax fair? Before trading I did consultant work and made $800-1000 per day. I was basically in the top tax bracket for a considerable part of my earnings. Now if I make $1000 a day trading (futures) I pay capital tax rate on 60% and the normal rate on 40%: what is fair about that? Why should people who actually produce value get taxed at a higher rate than speculators? I'm not saying the tax rate should hgher just saying that income is income and should be taxed the same. There is some tweaking that could be done of course, such as removing the $3000 loss limit on revenue for trading. However, I guess that all of us are simply trying to find the best tax method and that search will and should never end.
SWhiting, I agree with your "income is income" thesis. By the same token, I want to see us traders being allowed to create IRAs like the rest of the people. Money is money, and if I made it, legitimally, and pay taxes on it, let me save some for my old age and get rid of that "unearned income" nonsense. Btw, you can elect section 475 and get rid of the $3,000 yearly loss restriction.
If you incorporate and pay yourself some W-2 income you could establish an IRA. I am not doing so yet but I intend to move my IRA (from previous employee 401K) to a futures account and trade with that. This will be tax-free until I draw it out in 10 years or so.
Yes, but then I'll have to pay FICA and self-employment taxes, etc, increase my tax reporting needs/expense considerably, and complicate my relationships with vendors like TS and IB. I'm quite profitable but not wildly yet. Maybe next year I'll have to incorporate part of my business activity, we'll see.
I wasn't referring to the futures treatment of Cap gains, I was referring to cap gains period. Cap gains should be lower than regular income as an incentive to invest. Besides, our equity markets are shaky enough as it is. Most of my argument was against further raising rates on the wealthy. It simply doesn't work as intended. It DOES decrease funds available for investments where they would be most efficient. The best way to balance a budget by far, is simply to have a booming economy, with sane spending. The 90's dotcom boom was an example of this. Would have had a surplus regardless of the tax rates to a certain extent. This simply doesn't happen in high tax regimes except in rare cases. For example, many of the high tax Euro countries run larger deficits than the USA, and they do not have the huge military expenditures. The problem is that they traditionally grow very slow. Germany, France, Italy, and even the UK come to mind .Their deficits, as a % of GDP, are worse than ours is. They will occasionally have a good year or two, but their long term growth is slower, and long term deficits are larger. Japan is ugly also. Why? Slow growth. Now lets take Ireland. Absolutely booming, and has been for years. Directly attributable to the 12.5% corporate tax rate. Companies from Silicon Valley are falling over themselves to locate operations there. They have to pay real wages too, as opposed to SE Asia or Mexico. Its the educated work force, AND the marginal tax rate. They had a budget surplus of 2.3% of GDP which is huge (1996). They also have the lowest corporate taxes in the region, by far. Their personal income taxes are closer to that of the US than the EU. In other words, they are low for the region, but a much better economy. Relatively low taxes, and responsible spending is the best thing a nation can do if it wants a balanced budget and growth. Unfortunately, US politicians are addicted to spending as much as they possibly can. This is a problem in both parties now (used to be a Democrat specific problem for the most part, which is why I used to be a Republican!). Jayford