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"Of course her rate is higher." I think the vast majority of people would expect a billionaire to pay a higher tax rate than an upper middle class person. I wo
by jshen 15y ago
"Of course her rate is higher."
I think the vast majority of people would expect a billionaire to pay a higher tax rate than an upper middle class person. I wouldn't call that nonsense.
- jdludlow 15y agoI'm sure that you're right, but then the vast majority of people are easily swayed by cheap political rhetoric. If they're playing by the same rules, which it appears that they are, then what's the problem? It's not like he hasn't already paid income tax on that money the first time he earned it, and his absolute tax bill is vastly larger than hers is. If not being jealous and covetous of those who make more than I do puts me in the minority, then I guess that's where I'm at. Sadly, I believe that to be the case.
- justincormack 15y agoCapital gains are not really double taxation. Sure he paid tax, but then he earned more. Many countries charge income and capital gains at exactly the same rate, eg the UK does now.
- walkon 15y agoHow are they not being taxed twice? A company (which has owners) pays income tax on their profits, so the company and therefore, owners, have less capital remaining. Then, if the owners want to cash out anything from the post-income-taxed margin, they'll have to pay capital gains as well.
- jshen 15y agoIt's not that simple. One could just as easily make the case that workers get a lower salary due to higher corporate taxes, therefore they should pay a lower tax rate than owners. In short, it's not at all clear that a higher corporate tax rate is purely a tax on owners, and nothing else.
- aaronblohowiak 15y agoThat sounds like dividend taxes, not capital gains.
- emu 15y agoWe're off the original topic now, but I've never understood why the US doesn't enact a dividend imputation scheme, which nicely solves the double taxation problem on dividend income by giving the recipient of a dividend a credit for the corporate tax paid on that dividend. Australia has such a system.
- krschultz 15y agoI pay state income tax on my paycheck, and then I take that money and buy a new computer and have to pay state sales tax too! And where I live, I pay state income tax, buy a car and buy sales tax, and then every year after that I pay property tax on the value of the car. It's a triple tax! I'm not really sure why capital gains is such a problem. And truthfully a lot of capital gains (maybe even most?) are not doubled taxed. If you buy stock with after-income-tax money, then yes you pay that tax twice. But if the capital gain is derived from equity compensation a lot of times you don't pay income tax so it is only a single tax. That is what the Buffett rule is all about (and this article as well).
- cjdavis 15y agoNice straw, man. Thinking that a progressive tax system is a good idea has nothing to do with being jealous and covetous of those who make more than you. If you disagree with a progressive tax system go right ahead and support your case, but you're not going to do that with bs arguments nobody is making.
- krschultz 15y agoThe capital gains rate & structure is a legit policy question. Talking about flag burning laws, who wears a flag pin or not, those are cheap political squabbles. Keep in mind, capital gains haven't always had a lower tax rate than ordinary income. There is no rule of nature that says it has to be that way. We could make the capital gains rate 0%, or 0% up to $200,000 and then 40% for everything over $200,000. Or we could make more than simply 2 rates based on the length of time it took for the gain. Or we could make it any number of other options. Which one of these is preferable for economic or philisophical reasons is a good question. Warren's Buffet's secretary is no different than Joe the Plumber - they are a personification of the policy. It's hard to latch on to abstract reasoning but easy to see when presented as a comparison of two people.
- MartinCron 15y agoIf they're playing by the same rules, which it appears that they are... Of course they are playing by the same rules. Rich and poor alike get preferential tax rates on capital gains income the same way that rich and poor alike get tax breaks on private jet ownership depreciation. Anything else would be class warfare.
- citricsquid 15y agoDepends. The entire quip plays on peoples assumption they're both employees taking a standard wage and are "equal" besides the amounts. Unless I'm mistaken, Warren Buffet makes money from the ownership he holds, not as a salary, so the assumption people make ("of course he pays more", "what, he doesn't?!") is because they assume he's an employee and equal in everything but the amount, which isn't the case. He makes his money (a variable amount) from ownership, not work. If you prefaced the statement with an explanation of how he pays capital gains and not income tax because of the different types of money nobody would be confused / surprised.
- revelation 15y agoI know you just want to make the case for a more differentiated view here, but what you are in fact doing is defending a higher tax rate on work than for capital gains through mere ownership.
- jshen 15y agoPrecisely. I inherited tens of millions, then invested it, should I pay a lower rate than a person that works for a living?
- simplefish 15y agoI have no idea if you should, but in the US, you probably will. Depending on what year you inherited the money, you'll have paid up to 55%.
- jshen 15y agoThat seems reasonable. My problem is with the party that wants to abolish the estate tax and cut capital gains taxes.
- analyst74 15y agoIn that case, the more "fair" solution is high inheritance tax (maybe it's already in place?). Discouraging long-term investment through high capital gain is not a good solution.