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Taxing investments more than standard labor should be the baseline. Us workers should not be subsidizing the significantly discounted rate that investment earni

Taxing investments more than standard labor should be the baseline. Us workers should not be subsidizing the significantly discounted rate that investment earning are taxed at.

umvi 8y ago
"If you want more of something, subsidize it; if you want less of something, tax it." If you raise taxes on capital gains you'll get less investment. Maybe that's a good thing. Either way, I'm in favor of tax simplification in all of its forms; Tax law is like that spaghetti legacy codebase that is just dying for a refactor/rewrite.
- gamegoblin 8y ago
  Genuine question, as I am not well versed in finance: What else would those with capital do other than invest? That is, it seems like investment is clearly better than holding cash, regardless of the tax rate (with some caveats, e.g. not being in a deflationary economic state).
  - walshemj 8y ago
    They invest in lower risk securities which leads to a bull market in bonds and guilts which has its own problems. It also stifles innovation and messes up pensioners as their income is based on gilt yields.
    - munk-a 8y ago
      I don't understand why investors would do this, it seems like an unnatural response. If all capital gains are being taxes as income these investors would just voluntarily be choosing to make less money if they picked this strategy. Their strategy selection would equalize to being about what it is now but each cycle would yield them less money to reinvest and yield the government more money to invest. It can be your opinion that private investors are more efficient than the government but funding our "necessary services" (i.e. having an army, what not) is so deprived of income that it is being extracted through a regressive income tax. FYI, I'm all for cutting pork, but the income stream and what we end up spending that money on are two different issues.
    - dragonwriter 8y ago
      > They invest in lower risk securities That's still investing and the idea that higher taxes on capital income would reduce yield targets for capital investments is backwards.
    - icedchai 8y ago
      Seems like they’d need a higher return due to higher tax.
  - munk-a 8y ago
    Those with capital would still be best off investing in some manner. Tax loop holes in other countries may cause some expatriation of that investment but if those are closed then investment will continue but most money will be taken out of the economy during the investment cycle. Assuming this doesn't just lead to the government taking in massive amounts of money and not using it this would allow income tax rates to be reduced and spur consumer spending. It's a pretty simple issue of a high pressure leaky container, jam a wedge in one leak and the other leaks need to contribute more if you want to maintain the same amount of water coming out. Simplify the tax code and we even end up losing less money to trying to remember where all the leaks are.
    - candiodari 8y ago
      They would indeed invest it, but they would demand dividends be paid in natura. There would be a type of business where, you invest 5%, you become a director there. With free use of a yacht, private plane, car (these businesses come in all sizes, you essentially get 5% from what would be dividends to be spent as you wish as long as accounting can make it work), a hotel/travel budget, ... all these would no longer be personal expenditures, but business expenses. In actuality these businesses exist (even much more dirty: in practice, bank employees on occasion demand they be offered this, in trade for not sabotaging a loan. This is pretty common practice). But even "fairly", with actual investments, these businesses exist. And no, this is not illegal, nor do you want to make this illegal.
      - gamegoblin 8y ago
        Doesn't the IRS require reporting and tax payment for these non-cash fringe benefits?
        candiodari 8y ago
        Sure but they're never 100% fringe benefits. A director "has" to drive around meeting people. Customers/partners, hell even IRS representatives. So the car is taxed at 10%, because only 10% is used privately. Even that doesn't help because "taxed" in this case is a big word for "taken out of what the company pays the person". Which means the company pays in situations where the person controls the company, for obvious reasons.
- deogeo 8y ago
  So tax the poor, and subsidize the rich?
  - candiodari 8y ago
    Reality is pretty much the reverse in at least one important way: https://www.forbes.com/sites/michaeldurkheimer/2018/03/01/0-001-percent-one-percent/#14e574912cf2 https://www.forbes.com/sites/michaeldurkheimer/2018/03/01/0-...
walshemj 8y ago
That would reduce the capital for companies and / or make it more expensive - know what happens when companies run out of capital "workers" get made redundant. I don't mean to be harsh but your user name indicates you haven't actually entered the work force yet.
- jhayward 8y ago
  Companies do not create jobs. Consumer demand for products and services creates jobs. As long as the tax structure nourishes a strong middle class we will be a prosperous and stable society, and capital will flow just fine.
  - walshemj 8y ago
    And how do you do that when they are out of work ? And I have had to chair a meeting of a worker coop when we had to restructure due to running out of capital in the last dot.com crash so I have some idea what I am talking about.
- hnmonkey 8y ago
  Their idea has merit whether they've entered the work force or not. And, they could be anything that relates to students and yet not a student, like a teacher. I wouldn't infer much if anything from usernames... else you might assume that I'm a monkey and my thoughts on taxes should be ignored because I live in a jungle.
longerthoughts 8y ago
I agree with the sentiment here but would be interested to see what portion of US tax revenue is coming from the same people who are benefiting from the discounted rate for investment earnings. Basically, is the "subsidy" essentially coming from the beneficiaries and ultimately just undermining the progressive tax structure rather than the poor paying to subsidize lower tax rates for the investments of the rich.
icedchai 8y ago
If you did that you’d screw many retirees living off investment income. That’s no good for anyone.

Taxing investments more than standard labor should be the baseline. Us workers should not be subsidizing the significantly discounted rate that investment earning are taxed at.

umvi 8y ago

"If you want more of something, subsidize it; if you want less of something, tax it." If you raise taxes on capital gains you'll get less investment. Maybe that's a good thing. Either way, I'm in favor of tax simplification in all of its forms; Tax law is like that spaghetti legacy codebase that is just dying for a refactor/rewrite.

gamegoblin 8y ago
Genuine question, as I am not well versed in finance: What else would those with capital do other than invest? That is, it seems like investment is clearly better than holding cash, regardless of the tax rate (with some caveats, e.g. not being in a deflationary economic state).
- walshemj 8y ago
  They invest in lower risk securities which leads to a bull market in bonds and guilts which has its own problems. It also stifles innovation and messes up pensioners as their income is based on gilt yields.
  - munk-a 8y ago
    I don't understand why investors would do this, it seems like an unnatural response. If all capital gains are being taxes as income these investors would just voluntarily be choosing to make less money if they picked this strategy. Their strategy selection would equalize to being about what it is now but each cycle would yield them less money to reinvest and yield the government more money to invest. It can be your opinion that private investors are more efficient than the government but funding our "necessary services" (i.e. having an army, what not) is so deprived of income that it is being extracted through a regressive income tax. FYI, I'm all for cutting pork, but the income stream and what we end up spending that money on are two different issues.
  - dragonwriter 8y ago
    > They invest in lower risk securities That's still investing and the idea that higher taxes on capital income would reduce yield targets for capital investments is backwards.
  - icedchai 8y ago
    Seems like they’d need a higher return due to higher tax.
- munk-a 8y ago
  Those with capital would still be best off investing in some manner. Tax loop holes in other countries may cause some expatriation of that investment but if those are closed then investment will continue but most money will be taken out of the economy during the investment cycle. Assuming this doesn't just lead to the government taking in massive amounts of money and not using it this would allow income tax rates to be reduced and spur consumer spending. It's a pretty simple issue of a high pressure leaky container, jam a wedge in one leak and the other leaks need to contribute more if you want to maintain the same amount of water coming out. Simplify the tax code and we even end up losing less money to trying to remember where all the leaks are.
  - candiodari 8y ago
    They would indeed invest it, but they would demand dividends be paid in natura. There would be a type of business where, you invest 5%, you become a director there. With free use of a yacht, private plane, car (these businesses come in all sizes, you essentially get 5% from what would be dividends to be spent as you wish as long as accounting can make it work), a hotel/travel budget, ... all these would no longer be personal expenditures, but business expenses. In actuality these businesses exist (even much more dirty: in practice, bank employees on occasion demand they be offered this, in trade for not sabotaging a loan. This is pretty common practice). But even "fairly", with actual investments, these businesses exist. And no, this is not illegal, nor do you want to make this illegal.
    - gamegoblin 8y ago
      Doesn't the IRS require reporting and tax payment for these non-cash fringe benefits?
      - candiodari 8y ago
        Sure but they're never 100% fringe benefits. A director "has" to drive around meeting people. Customers/partners, hell even IRS representatives. So the car is taxed at 10%, because only 10% is used privately. Even that doesn't help because "taxed" in this case is a big word for "taken out of what the company pays the person". Which means the company pays in situations where the person controls the company, for obvious reasons.
deogeo 8y ago
So tax the poor, and subsidize the rich?
- candiodari 8y ago
  Reality is pretty much the reverse in at least one important way: https://www.forbes.com/sites/michaeldurkheimer/2018/03/01/0-001-percent-one-percent/#14e574912cf2 https://www.forbes.com/sites/michaeldurkheimer/2018/03/01/0-...

walshemj 8y ago

That would reduce the capital for companies and / or make it more expensive - know what happens when companies run out of capital "workers" get made redundant. I don't mean to be harsh but your user name indicates you haven't actually entered the work force yet.

jhayward 8y ago
Companies do not create jobs. Consumer demand for products and services creates jobs. As long as the tax structure nourishes a strong middle class we will be a prosperous and stable society, and capital will flow just fine.
- walshemj 8y ago
  And how do you do that when they are out of work ? And I have had to chair a meeting of a worker coop when we had to restructure due to running out of capital in the last dot.com crash so I have some idea what I am talking about.
hnmonkey 8y ago
Their idea has merit whether they've entered the work force or not. And, they could be anything that relates to students and yet not a student, like a teacher. I wouldn't infer much if anything from usernames... else you might assume that I'm a monkey and my thoughts on taxes should be ignored because I live in a jungle.

longerthoughts 8y ago

I agree with the sentiment here but would be interested to see what portion of US tax revenue is coming from the same people who are benefiting from the discounted rate for investment earnings. Basically, is the "subsidy" essentially coming from the beneficiaries and ultimately just undermining the progressive tax structure rather than the poor paying to subsidize lower tax rates for the investments of the rich.

icedchai 8y ago

If you did that you’d screw many retirees living off investment income. That’s no good for anyone.