4 ms·

This is an extraordinarily bad take. In the US we tax the marginal middle class dollar of income about 3x higher than we do a marginal dollar of investment inc

This is an extraordinarily bad take. In the US we tax the marginal middle class dollar of income about 3x higher than we do a marginal dollar of investment income. Do we hate the middle class more than wall street? We tax canadian steel more than chinese PCBs. Do we hate the Canadians more than the Chinese? More broadly, this would seek to interpret the lowest-tax anarchies as the most tolerant and loving societies and the highest-tax liberal democracies as most hate-filled, which seems equally suspect. Your point applies to sin taxes. And... basically nothing else. In general tax policy works by starting reasonably fair and then loosening the screws on whichever demographic lobbies the best. So in fact corporate taxes are lower than personal taxes and VATs almost everywhere, etc...

sokoloff 6y ago
> In the US we tax the marginal middle class dollar of income about 3x higher than we do a marginal dollar of investment income. Marginal income middle class tax rate [0]: 22%, some at 24% Marginal capital gains rate for a fairly generous set of assumptions that benefit your argument: 15%. 24% is 60% higher, not 300% higher, than 15%. That's more or less taking the best-case for your argument. Add FICA contributions (which earn credits towards your own Social Security payouts, so it's unclear exactly how to allocate this in current costs) and it's still way less than 200% higher, let alone 300%. Lots of investment income is taxed at 23.8% (20% + 3.8% surtax). 24% is 0.8% higher than 23.8%, not 300% higher. [0] - I took the first hit I could find: Pew Research defines middle class as 2/3 to 2x the median income, $40K to $120K in 2018.
- AlexTWithBeard 6y ago
  The parent has a fair point though: why would capital gains ever be taxes at a rate different from income?
  - refurb 6y ago
    An attempt incentivize desirable behavior - long-term investment. If you invest short term it taxes like income.
- newacct583 6y ago
  ...you're right. I was figuring a marginal tax rate of about 40% and dividing by 15%, then rounding up. In practice the number is closer to 2x, as you said. Why does that change the analysis?
  - sokoloff 6y ago
    If the magnitude of the difference doesn't change the analysis, why mention it in the first place?
    - newacct583 6y ago
      "Income tax is significantly higher than capital gains, and that clearly contradicts the contention that we preferentially tax things we hate." Do you actually disagree with that statement? If the essence of the argument doesn't change, why argue with numbers in the first place?
      - sokoloff 6y ago
        The second half of that statement is purely argumentative and as stated can neither be falsified nor proven true. The first half of the statement is also not obviously true to me, given the large amount of wage income that is federally marginally taxed at 22 or 24% and the large amount of long-term capital gains that are taxed at 23.8%. Is some wage income taxed higher than some investment income? Obviously, yes. Is that done specifically to disincentivize work? I don’t think so. Are long-term capital gains and qualified dividends taxed lower in order to incentivize long-term investing? I think so. Do we conclude from that that politicians hate workers more than investors? Exploring that requires looking at facts not yet in evidence here.
        newacct583 6y ago
        > The second half of that statement is purely argumentative and as stated can neither be falsified nor proven true. OMG. I was paraphrasing YOUR COMMENT! Precisely because it's irrefutable nonsense. [And the fact that you came back after nine hours to edit your comment to make it look like you had more to say is just... <chef's kiss>]
ObserverNeutral 6y ago
> More broadly, this would seek to interpret the lowest-tax anarchies as the most tolerant and loving societies and the highest-tax liberal democracies as most hate-filled, which seems equally suspect. The level of hate towards the elites and those who are doing better than the mean is the same, anarchies solely express such hatred with violence and violent repossession of the stuff and the status accumulated by the "elites". liberal democracies etc. do it annually, subtly via taxation.

sokoloff 6y ago

> In the US we tax the marginal middle class dollar of income about 3x higher than we do a marginal dollar of investment income. Marginal income middle class tax rate [0]: 22%, some at 24% Marginal capital gains rate for a fairly generous set of assumptions that benefit your argument: 15%. 24% is 60% higher, not 300% higher, than 15%. That's more or less taking the best-case for your argument. Add FICA contributions (which earn credits towards your own Social Security payouts, so it's unclear exactly how to allocate this in current costs) and it's still way less than 200% higher, let alone 300%. Lots of investment income is taxed at 23.8% (20% + 3.8% surtax). 24% is 0.8% higher than 23.8%, not 300% higher. [0] - I took the first hit I could find: Pew Research defines middle class as 2/3 to 2x the median income, $40K to $120K in 2018.

AlexTWithBeard 6y ago
The parent has a fair point though: why would capital gains ever be taxes at a rate different from income?
- refurb 6y ago
  An attempt incentivize desirable behavior - long-term investment. If you invest short term it taxes like income.
newacct583 6y ago
...you're right. I was figuring a marginal tax rate of about 40% and dividing by 15%, then rounding up. In practice the number is closer to 2x, as you said. Why does that change the analysis?
- sokoloff 6y ago
  If the magnitude of the difference doesn't change the analysis, why mention it in the first place?
  - newacct583 6y ago
    "Income tax is significantly higher than capital gains, and that clearly contradicts the contention that we preferentially tax things we hate." Do you actually disagree with that statement? If the essence of the argument doesn't change, why argue with numbers in the first place?
    - sokoloff 6y ago
      The second half of that statement is purely argumentative and as stated can neither be falsified nor proven true. The first half of the statement is also not obviously true to me, given the large amount of wage income that is federally marginally taxed at 22 or 24% and the large amount of long-term capital gains that are taxed at 23.8%. Is some wage income taxed higher than some investment income? Obviously, yes. Is that done specifically to disincentivize work? I don’t think so. Are long-term capital gains and qualified dividends taxed lower in order to incentivize long-term investing? I think so. Do we conclude from that that politicians hate workers more than investors? Exploring that requires looking at facts not yet in evidence here.
      - newacct583 6y ago
        > The second half of that statement is purely argumentative and as stated can neither be falsified nor proven true. OMG. I was paraphrasing YOUR COMMENT! Precisely because it's irrefutable nonsense. [And the fact that you came back after nine hours to edit your comment to make it look like you had more to say is just... <chef's kiss>]

ObserverNeutral 6y ago

> More broadly, this would seek to interpret the lowest-tax anarchies as the most tolerant and loving societies and the highest-tax liberal democracies as most hate-filled, which seems equally suspect. The level of hate towards the elites and those who are doing better than the mean is the same, anarchies solely express such hatred with violence and violent repossession of the stuff and the status accumulated by the "elites". liberal democracies etc. do it annually, subtly via taxation.