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If capital gains taxes are raised, then someone who invests outside of a 401k or IRA gets double screwed.
by fortythirteen 9y ago
If capital gains taxes are raised, then someone who invests outside of a 401k or IRA gets double screwed.
- NegativeK 9y agoHow would you get double screwed? You would only pay income taxes on the gains.
- vasilipupkin 9y agothe corporation also pays taxes on the income before distributing it to you.
- jgalt212 9y agoNot if you're Apple, et al. https://www.nytimes.com/2016/09/01/business/yesterday-outraged-by-apples-tax-dodge-today-by-its-tax-bill.html?mcubz=3 https://www.nytimes.com/2016/09/01/business/yesterday-outrag...
- fooster 9y agoThats because US corporate tax rates are ridiculous and so big corp plays games. Small corp of course are the real victims because they can't afford the army of lawyers and accountants to manage all the complex tax avoidance schemes so they get stuck with some of the highest corporate tax rates in the world.
- jgalt212 9y agoI agree. That is part of the problem. But, I'd argue that even if US Corp rates were much lower (say 15%), Tim Cook, ever the optimizer, would still pursue the 1% rate they currently achieve. I think rates should be lowered and and tax avoiders/dodgers should not be allowed to bid on govt contracts.
- vasilipupkin 9y agoIf Apple pays a dividend, it has to pay taxes on it first. You are confusing that with their overall tax rate. It's low because they have a pile of cash that they aren't paying out
- jgalt212 9y agoIt's in good part because of that cash pile (now above $250B) that Apple stock price is so high. And this post is about capital gains being taxed lower than income. Time Cook pays himself in options, which influenced by untaxed cash hoard. https://www.cnbc.com/2017/05/02/apples-cash-hoard-swells-to-record-256-8-billion.html https://www.cnbc.com/2017/05/02/apples-cash-hoard-swells-to-...
- kazagistar 9y agoWhere does the double come from? Each dollar only gets taxed once... only the profit gets taxed when investing, not the principal, right?
- fortythirteen 9y agoIf you make capital gains tax the same as income tax, then you're making the situation worse for people who invest their actual income over trust fund babies, not better. It places another barrier on hard working people trying to move from middle to upper-middle or upper class status.
- ascagnel_ 9y agoThat doesn't explain how this person would have the same income taxed twice. Taxes are paid on gains, not the return of principal. Income would be taxed, and then the returns from the invested income would be taxed at a later date.
- bradlys 9y agoTaxed when you get your income (income taxes) and then taxed again when you withdraw (capital gains). Traditional 401k and Traditional/Roth IRA allow you to only be taxed once. (Defer income taxes until you withdraw or you take the income tax hit upfront but are not taxed on withdraw)
- gozur88 9y agoThe problem is inflation. Taxes aren't calculated on constant dollars, and it's really not reasonable to tax inflationary gains.