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Do The Rich Pay Too Much Federal Income Taxes

Do The Rich Pay Too Much Income Taxes

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Joby said:
So when Kobe sees his measly millions in taxable income he pays 39.6% on federal income tax, plus the state taxes of California. And Cali loves that entertainment money.

Meanwhile, Mr Gates will pay either 15% or 20% tax on the capital gains he makes from stock or dividends (it would not surprise me if he claims $0 income from Microsoft just to pay no capital gains) assuming they qualify as "long term."

That's how I understand it. I am wrong? If not then that's an issue for me.

edit: Like Lincoln said, A dollar from labor should be valued higher than one from capital.
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He he he. Yes. You can own a C corporation such as Microsoft and work for absolutely free. If you have enough control of the company you can elect to not pay out dividends. You can choose not to sell any of your stock. You can live off of money that you saved up last year. Guess what? You have $0.00 taxable income for that year. Your net worth could increase by trillions of dollars and none of it is taxed until you cash in.

Does that make sense? People have complained about this loophole so I don't know if it works this way any more.
 
Joby said:
That's how I understand it. I am wrong? If not then that's an issue for me.

edit: Like Lincoln said, A dollar from labor should be valued higher than one from capital.
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Can we agree that taxes distort behavior? If you're prepared to spend $10,000 to buy a car and that $10,000 car, which you actually believe is worth $10,000 but not $10,050, now costs you $11,500 with taxes, then you're not going to buy that car.

Well taxes also distort capital allocation decisions. If you're faced with a higher capital gains tax, then you're more inclined to keep your investment capital in place, with unrealized capital gains, even if a slightly better alternative investment is available, because to free up the cash to invest in the alternative you have to cash out your investment and pay the capital gains tax. The higher the tax the more reluctant you become to switch out.

What this all means is that investment is misallocated. The best uses for capital are not funded. This translates into economic inefficiency. Taxes distort behavior.

The question for liberals is this - Do you want the government to have more tax money to spend or do you want more "fairness" even at the cost of less tax money to spend?

Here's President Obama being questioned on this issue:

GIBSON: All right. You have, however, said you would favor an increase in the capital gains tax. As a matter of fact, you said on CNBC, and I quote, "I certainly would not go above what existed under Bill Clinton," which was 28 percent. It's now 15 percent. That's almost a doubling, if you went to 28 percent.

But actually, Bill Clinton, in 1997, signed legislation that dropped the capital gains tax to 20 percent.

OBAMA: Right.

GIBSON: And George Bush has taken it down to 15 percent.

OBAMA: Right.

GIBSON: And in each instance, when the rate dropped, revenues from the tax increased; the government took in more money. And in the 1980s, when the tax was increased to 28 percent, the revenues went down.

So why raise it at all, especially given the fact that 100 million people in this country own stock and would be affected?

OBAMA: Well, Charlie, what I've said is that I would look at raising the capital gains tax for purposes of fairness.​
 
RiverDad said:
It's exactly the same with businessmen because someone is CHOOSING to pay those businessmen their salaries.

Secondly, what's up with everyone being a Nosy Betty and sticking their noses into what other people are making. No one is taking your money and giving it to Kobe or Tim Cook.
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No it isn't and why can't people see wealth distribution in the business world as idiotic and unfair and comment on it?
 
RiverDad said:
The question for liberals is this - Do you want the government to have more tax money to spend or do you want more "fairness" even at the cost of less tax money to spend?
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Good luck getting a straight answer on that one.
 
Interesting question, but I will have to do more research to give a qualified response.

Edit: I mean my experience with the capital gains tax is limited, to say the least.
 
tres borrachos said:
I'll toss up a challenge to the last 2 sentences, Bodi. Hope all is well!

The CEO of a very large multinational company has an enormous responsibility, and has to answer to the Board, stockholders, hell - even the freaking media.

Why would anyone want to take on that kind of job and not get paid accordingly? $1 million isn't that much money. And good luck getting someone to do that job at the same pay as someone who has almost no responsibility for the massive bottom line.
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CEOs of most large companies make much more than 1 million. I just threw that out. And good luck only in that is what they expect because that is how it is set up. If it was changed and they made 500K a year, which is a ****ing ton of money... they would do it. If there were salary caps, they would still do it.
 
AlabamaPaul said:
I don't view it as ridiculous at all. What I view as ridiculous is your assertion that no one is worth that level of income. How much, in your world, should someone be "allowed" to earn?
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I don't know but the difference in pay is ridiculous and unfair and making 1 million or more while others have to fight just to survive is illogical and ridiculous. I am not even a liberal... just a realistic conservative.
 
Bodhisattva said:
CEOs of most large companies make much more than 1 million. I just threw that out. And good luck only in that is what they expect because that is how it is set up. If it was changed and they made 500K a year, which is a ****ing ton of money... they would do it. If there were salary caps, they would still do it.
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So you would like government to set wage scales for every position with a maximum of $500K? How much productivity do you think might be lost because of this?
 
Bodhisattva said:
I don't know but the difference in pay is ridiculous and unfair and making 1 million or more while others have to fight just to survive is illogical and ridiculous. I am not even a liberal... just a realistic conservative.
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No, your views are more along the lines of Marxist...
 
Joby said:
Interesting question, but I will have to do more research to give a qualified response.

Edit: I mean my experience with the capital gains tax is limited, to say the least.
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Whenever an investor cashes out an investment which has experienced capital gains he takes a tax hit and nets out a lower amount. That's easy to understand. This though has implications for his own investment decisions and for the economy in general. If he keeps the investment in place, then it can compound annually with a larger capital base.

Let's put some numbers into the mix. He starts with $1,000 and over time it grows to $2,000. Now he comes across a new investment which yields 10% per year instead of his current yield of 9%. What choice should he make?

If he stays put, $2,000 @ 9% returns $180 per year.

If he cashes out in order to invest in the new opportunity, then his $1,000 capital gains is taxed at 28%, or $280, and he now has a net investment of $1,720 at 10% which returns $172 per year.

He's better off staying put and the government loses $280 in tax revenue this year.

What happens if the capital gains tax rate is 15%? His capital gains taxes are $150 and he now has $1,850 to invest @10% which returns $185 per year.

He's now better off exiting his present investment and moving to the new investment. The government also reaps $150 in tax revenue that it wouldn't receive if he stayed put and the economy is slightly better off because investment capital has moved from a use which could only afford to pay 9% return on capital to one which can afford to pay 10% returns.
 
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AlabamaPaul said:
So you would like government to set wage scales for every position with a maximum of $500K? How much productivity do you think might be lost because of this?
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No. That is not what I want.
 
AlabamaPaul said:
No, your views are more along the lines of Marxist...
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Just you assuming ignorantly away about **** you don't understand... keep drinking the cool aid though.
 
AlabamaPaul said:
Then what do you want? Do you want to force an employer to pay employees more than their market value?
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I haven't said what I want... I am merely pointing out that rich people make too much money and that poor people, in many instances, don't make enough. That scares people and I understand that better than most as I was raised in a wealthy family.
 
RiverDad said:
What are you going on about now? Do you imagine that the Walton family wealth is sitting as cash in their private underground bank vaults in Arkansas? Most of their family wealth is being put to use in the economy, it forms the shareholder capital of Walmart. Those stores have to be paid for, developers don't just build huge stores and give them away to retailers.
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Haven't we dis-proven trickle down economics yet?
 
Bodhisattva said:
I haven't said what I want... I am merely pointing out that rich people make too much money and that poor people, in many instances, don't make enough. That scares people and I understand that better than most as I was raised in a wealthy family.
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How much is too much in your world? I was never scared by someone else having more than me when growing up...
 
Bodhisattva said:
I haven't said what I want... I am merely pointing out that rich people make too much money and that poor people, in many instances, don't make enough. That scares people and I understand that better than most as I was raised in a wealthy family.
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Beautiful women get too much male attention and hideous women get too little male attention. OK. We've both noticed some pattern. Now how are we going to define what constitutes "too much" and "too little?"
 
Bodhisattva said:
CEOs of most large companies make much more than 1 million. I just threw that out. And good luck only in that is what they expect because that is how it is set up. If it was changed and they made 500K a year, which is a ****ing ton of money... they would do it. If there were salary caps, they would still do it.
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My father was the CFO of a Fortune 50 company. I know what he made - it was a lot. I know how hard he worked - it was a lot more than I do.

$500,000 a year isn't really that much money. What should a payroll clerk in a company make if the CEO is only making $500,000? Half of that?
 
haymarket said:
You are confusing a consumers retail purchase with a citizens tax obligation. They have nothing to do with one another and confusing them is a serious logical fallacy which dooms your position.

As a member of the American society, how much you pay in taxes is irrelevant to your tax bill. That is simply reality and for you to insist on a connection is simply factually wrong.

When one goes to Costco and fills their basket with what they want, it is right and proper for them to evaluate the benefit of the items with the price they pay. But that does not apply to a citizens tax obligation.
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why do your posts constantly and dishonestly confuse an opinion with a fact? I argue that the tax system should be based on the same principles of most everything else in life-if you want something, you pay for it.

and its dishonest for your posts to assume I don't know how the present system works
 
Glen Contrarian said:
No, the rich aren't paying nearly enough - not as long as they have the poor working at wages so low that they have to have government assistance in order to have food, shelter, and clothing. First ensure that all entry-level workers are paid a living wage (as the 'Father of Capitalism' Adam Smith himself said was proper), and THEN come back and ask us about who's paying too much or too little taxes.
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that's a moronic argument. are you saying the rich should pay more taxes to compensate for the market not valuing low skills work enough?
 
Joby said:
So when Kobe sees his measly millions in taxable income he pays 39.6% on federal income tax, plus the state taxes of California. And Cali loves that entertainment money.

Meanwhile, Mr Gates will pay either 15% or 20% tax on the capital gains he makes from stock or dividends (it would not surprise me if he claims $0 income from Microsoft just to pay no capital gains) assuming they qualify as "long term."

That's how I understand it. I am wrong? If not then that's an issue for me.

edit: Like Lincoln said, A dollar from labor should be valued higher than one from capital.
Click to expand...

1) people like Kobe aren' whining about the "reduced" tax on investment income because almost every high salaried individual is investing a fair amount of their salary. And dividends are often taxed twice.

2) the net tax rate on billionaires is 15%-that is still much higher effective rate than most americans. and those billionaires pay far more actual dollars than most people do-and GET nothing additional in return
 
phildozer9121 said:
Haven't we dis-proven trickle down economics yet?
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we have disproven the socialist theory of taxing ourselves to prosperity

we also have proven that "fairness" is a loaded term with socialists and generally serves as a facade to hide butt-hurt envy
 
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