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Wrong, Matt (and Mark). Entrepreneurs "have business to do" as Mark puts it because they stand to make some money from their efforts. The less money they stand
by timae 18y ago
Wrong, Matt (and Mark).
Entrepreneurs "have business to do" as Mark puts it because they stand to make some money from their efforts. The less money they stand to make, the less incentive. period.
Also, you state the following as if its fact:
"what capital gains taxes really do is favor the ultra-wealthy who live off of their investments, rather than those generating wealth directly"
No. In order for the ultra-rich person in your example to have accumulated $5M, he EARNED $6,750,000 and paid the government $1,750,000. So, by paying tax on his investment income, he's paying tax twice on the same money. That simple error aside, you're also missing the point that capital gains tax discourages investing in companies! Which has an impact on a company's cost of capital which has an impact on the price of goods and services which has an impact on you.
- deepster 18y agoAbsolutely correct! It's double taxation!
- trominos 18y agoSo? Tax rates are determined (well, should be) by what works. If some double taxation is good for the nation, more power to it.
- laut 18y agoFirst of all it is morally wrong. And for the good of a nation? Nationalism is an ugly thing. Second of all it's not good for the nation.
- rw 18y agoMorally wrong? Like how? Please look up "utilitarianism" and do some reading on ethics, social contracts, etc. A statement like the one you made really needs further reasoning to back it up. You might even be correct - but just claiming something to be true doesn't make it so.
- nazgulnarsil 18y agosocialism is ideally utilitarian. in reality the only people who benefit are those who hold the regulatory power to grant or withhold public funding. all you wind up doing is concentrating power in the hands of those who get to decide what is "the greatest good".
- deepster 18y agoI have no problems with double taxation. Just don't compare capital gains vs. Income tax. Which is what the blogger is doing. When in reality the equation is: Actual Tax Paid = (Income Tax + Capital Gains tax).
- mlinsey 18y agoI do not understand why people make such a big deal of the "double taxation" argument specifically in the context of capital gains. If I hire an employee, I have to pay payroll taxes on the salary I pay him or her, and then I also have to pay business taxes on the value that the employee gives to the company in the form of increased revenue. Is this "double taxation" also a cause for moral outrage?
- nazgulnarsil 18y agoyes. name something good that comes from federal taxes. all of the things that I associate with good government (schools, firefighting, disaster preparedness, zoning, etc.) are all handled by state and local governments. the vast majority of federal taxes go towards socialist pyramid schemes or a wasteful military that got so bored it had to attack iraq.
- mlinsey 18y agoSo in other words you have no problem with "double taxation" per se, your issue is with taxes generally.
- fallentimes 18y agoAgreed. All I can think of is defense (not offense), intelligence, (poorly executed) safety nets, (some) education and (some) infrastructure. Lot of qualifiers, which exemplifies the problem.
- nazgulnarsil 18y agothe intelligence service is one of the worst offenders. it is the epitome of bloat and corruption.
- fallentimes 18y agoHow do you think it should be fixed/organized? I used to live in DC; I cried myself to sleep at night thinking about government waste.
- rms 18y agoIf you don't tax capital, then only the wealthy will own capital. Eventually the capital starts owning itself and then the people don't even own capital anymore. Our tax system has to try and fix one of the fundamental flaws of capitalism -- the tendency for the rich to get richer and the poor to get poorer. Without a capital gains tax, this very worst aspect of capitalism becomes even more emphasized, as capital will last forever.
- kingkongrevenge 18y ago> fundamental flaws of capitalism -- the tendency for the rich to get richer and the poor to get poorer BS. Riches to shirtsleeves abound. Wealth rarely lasts three generations. Now, there are certain subgroups that seem mired in poverty, but that's another matter. The extent to which the rich have been getting richer and the poor getting poorer for the last 30 years in America has everything to do with the explosive growth of government and regulation, NOT capitalism. Capital gains should be zero. All wealth creation is driven by savings and capital. Maximized capital investment and the incentives to save, maximize growth. Income taxes should also be zero, by the way. It is entirely feasible to fund a properly scoped government with excise, duties, and user fees.
- yummyfajitas 18y agoIn what capitalist/mostly capitalist system have the poor gotten poorer? Certainly, the rich may get rich faster than the poor, but that's far from the same thing.
- fallentimes 18y agoI sort of see what you're saying. But the States' poor now are better off than the States' middle class was in the 1800s. The problem is, this isn't close to true in many other countries.
- brlewis 18y agoWhat are you talking about when you say double taxation? $6,750,000: money Interest paid on the remaining $5MM: other money I'm seeing two sums of money and two taxes, a 1:1 ratio. Where's the double taxation?
- deepster 18y ago1.) The money you've invested was already taxed. 2.) The money you received as dividends was taxed through corporate income tax. I have no qualms about paying captial gains tax. But the blogger's comparison of capital gains tax vs. income tax is incorrect.
- Xichekolas 18y agobrlewis has a point. If I earn $6.75mm, then pay tax on it, I have $5mm. Then I have $5mm in the bank and go get a job and earn another $100k, I'm only taxed (via income tax) on that $100k. Similarly, if I have $5mm in the bank and it earns me $100k, I'm only taxed (via capital gains) on that $100k. They are parallel taxes... not taxing the same money. The $100k is either earned income or investment income, and the $6.75mm was only ever earned income. With dividends, it's easy to see that they are double taxed, but is that wrong? Your regular paycheck is double taxed too... first with income tax and then (in most states) with sales tax. There is nothing inherently amoral about double taxation, although it is kind of annoying how it hides your total tax rate. To me, the annoyance of capital gains taxes is that it creates an entirely parallel tax rate structure, adding complexity (like everything Congress does with the tax code). If capital gains were treated like normal income, and capital losses (up to a certain amount) were treated like normal deductions, then taxes would be a lot easier for most people to file. Same goes with sales tax. The fact that the government has turned every retail business in the country into a tax collector was an enormous coup. The system is impractical and a pain for businesses, placing the burden on them to raise funds for the states. It's also a massively regressive tax. Due to the impractical implementation, you can't even try to fix the regressive nature. States really need to find a better way to fund themselves.