"It all began with a perk. Part of the JDS benefits package was an employee stock purchase plan, which let workers buy company shares at a huge discount. As JDS's stock surged in 2000, workers were able to get shares worth more than $300 for roughly $2 apiece through small deductions from their paycheques. Plant workers with modest incomes suddenly had visions of expensive cottages and early retirement. But the celebration was short-lived. The stock peaked in March of 2000, then tumbled almost as fast as it rose. By the end of the year, it had dropped by 68 per cent. The plunging share price was a disappointment, but the real disaster came that winter, when the tax forms arrived. Because the workers got stock at a discount, they were taxed on the difference between what they paid and the stock's value on the date it was issued -- $305. Joe Wood worked as an engineer at JDS for $40,000 a year, and he suddenly had a tax bill for $138,000. By the time he realized what was happening, it was too late to sell -- the shares had fallen by 80 per cent and were worth a fraction of the taxes he owed. To make matters worse, JDS closed its Victoria plant in the summer of 2001, putting Wood and hundreds of others out of work, with no way to pay their tax bills." http://www.macleans.ca/article.jsp?content=20050314_101963_101963 I wonder how you'd feel about your 'brilliant' idea if you were in Mr. Wood's case? Way to help out the working man.
VAT is worse, LOL! VAT brings in the underground economy to the role of taxpayers!! In California we passed prop 13 decades ago. It freezes property taxes until the title is transferred outside the family. In place of property taxes we have sales tax... I love it, we can have the American Dream [that's homeownership, not cradle to grave security] while drug dealers, pimps, hookers, welfare sucking assholes, and illegal aliens pay their taxes at the Point of Sale terminals everywhere...
From the replies I got here I can only conclude that just about everyone responding is either unwilling or unable as an investor to compete economically with middle-class workers on an even playing field. The original article was alarmed at investors possibly having to pay the same tax rates dividends that non-investors pay on income earned though work or interest on their savings accounts. Right now investors pay about half the tax rates of workers on dividends and long-term realized capital gains. They pay no taxes (0%) on unrealized capital gains which are stacking up in their accounts (and if they need to cash them in, they can offset the realized gains with any "paper losses" smart investors accumulate). Thus, investment returns overall are taxed at about one-fifth the tax rate that a construction worker pays on his salary. This despite the fact that poor and middle-class taxpayers are funding the economic infrastructure (bailouts, roadways, public educaton of the workforce, etc.) provided by government that make all those investment returns possible. So in essence, investors cannot compete without government subsidies (lower taxes and economic infrastructure) .... Some one less charitable than me would call government give-aways "investor welfare"
I don't know what the hell Obama is up to, but I'm going to be putting all my money in MUB soon and the gov't can stuff it because I'll be paying nada.
Pete you are overlooking the fact that investment gains are made from capital that was earned through wages or business profits in the first place. The capital has *already been taxed* at exactly the same rate per $ income/profit as the workers or small businesses you are referring to. Investor X maybe made 100k last year, paid 30k tax, spent 50k, and invests 20k. Big spender Y making the same 100k, pays the same 30k, spends 70k. For there to be fairness, the tax on the 20k that X invests should be identical to the sales tax/VAT on the extra 20k that Y spends. Since sales tax in most US states is in single digits, that means a fair tax on investment income would be in single digits. Investors in the US are thus penalised with tax approximately 150% higher than non-investors. You are proposing to raise it to 500% more than what spending gets taxed at. In other words, you are championing the lazy materialist high-spending oppressor class against downtrodden over-taxed responsible and diligent savers. This is typical of the economic exploitation of the little guy perpetrated by statist political systems - a kind of latter-day disguised serfdom.
OK, I did. There are a number of convenient omissions on that site that need to be addressed. Here's a few. Myth: The Rich family built their $1.3 million estate tax-free. Truth: Part of that money was earned (and income taxed along the way) through the hard work of Ms. Rich. The other part was inherited, which was earned (and income taxed along the way) through the hard work of her parents. Myth: The Rich family pays no property tax because they rent a condo. Truth: They don't write a check to the state, but their landlord does. It's built right into the rent. Myth: Dividend income is taxed at a lower rate than wage income. Truth: Dividends are taxed as corporate income when the company makes money, and again taxed as income when the stock holder gets their check. Myth: Warren Buffett (an example used in the essay) doesn't pay his fair share of taxes. Truth: The average federal income tax paid is $13,453 per household. Buffett paid $8.1 million, or 602 times the national average. He not only paid his fair share, but the fair share for 601 other American households.
Thanks for looking over the site. I really appreciate it.: http://elitetrader.com I never claim the fortune was earned tax-free. The money they are making off of it NOW is a nearly tax free 130,000 (at a 4% tax rate) vs $73,000 for the working class Smiths taxed at 28% Your point about the property tax is addressed in the essay; Even if the Richs bought the condo and paid taxes directly they still pay half the total taxes of the working class family. Further ... so you would consider the landlord to be paying no tax on his investment property? You can't have it both ways - the landlord and renter are not both paying the full tax. Corporate taxes are partly passed along to consumers. Yes, the rest is in effect paid by the stockholders. I don't know how if the proportion has ever been quantified. It is why I have said in this thread I think that in exchange for a wealth tax, the estate tax, capital gains tax and possibly even qualified dividends taxes could be done away with. I would not do away with corporate taxes, because then foreign investors would get a free ride, getting full gains from the financial infrastructure our governments provide. It really makes no difference even if Buffett paid a million times the national average. What's important in terms of fairness and not distorting the economy is the TAX RATE he pays on the money he makes should not be vastly lower than 90% of the population. As of now he pays a less than 1% tax rate on his investment return, about about 30 times smaller the tax rate paid by the average working Joe. Your argument is like saying it is ok to tax the paperboy $80 on his $100 earnings (80%) and taxi a banker 20,000 on their 200,000 (10%) earned because after all the banker is paying 250 times more taxes than the paper boy.