Have you ever asked yourself the question why income from capital is taxed so much lower than any other income?[/quote]
in the 1980’s they dropped the capital gains tax, and taxed capital gains at the normal rate. The revenue from this tax actually dropped by half.
People take the tax rate into account when they invest, so trading drops, and so does the revenue.
When the capital gains was increased in the 1990’s, taxes started to flood in.
Now earlier you asked:
And no to that, I did not say that. Quit putting words into my mouth.
Bush’s tax cuts resulted in more revenue going to the government, similar to the events of the 1990’s.
The key here is by leaving people more money, you are creating more taxable situations, while at the meantime the economy is not stifled by excessive taxes, helping to boost the economy.
What I was referring to was Bush’s excessive spending.
BostonBarrister wrote:
Is he counting his capital gains as income? Very probably.
Income from wages is taxed too highly.
tedro wrote:
Yes, he is. His salary is actually only $100,000. That 15% capital gains tax keeps his effective rate pretty low.
15% and no payroll withholding for social security or medicare either… Which is how regular income should be treated as well…[/quote]
Technically social security doesn’t come in to play because it is only taxed up to the first $97,500 (2007) of income. So, he is already paying the max in social security. Medicare does not have a max so he is getting out of an extra 1.45% on that.
Is he counting his capital gains as income? Very probably.
Income from wages is taxed too highly.
Have you ever asked yourself the question why income from capital is taxed so much lower than any other income?[/quote]
All of the time and I can think of reasons to support it and reasons to be against it. Obviously, based on my want for a complete flat tax, I am overall against the difference in rates.
Reasons for:
Encourages Saving and investing
Gives small business owners a chance to keep more of their earnings.
(As pointed out by someone else) With the current income tax, having a lower capital gains tax actually increases tax revenue, due to more people willing to save and invest.
Against
Warren Buffet has a lower tax rate than the middle class.
Capital gains are easier to earn than other income. Hence it being called “unearned income”.
Until there is a flat tax or sales tax, I will never agree with any progressive type system. Discussing capital gains tax really goes hand in hand with income tax.