Re: Romney's tax rate is only half as high as the middle class pays
Not sure what your argument is here. Can you lay it out?
I think I already have. Capital gains treatment of dividends is another piece of social engineering, in my opinion. It encourages investors to invest in the stock market rather than put their money in their mattresses or in banks. You're arguing that people can invest in foreign corporations, receive dividends from them, and are also taxed at the favored rate doesn't negate its value as an investment incentive in American companies.
Mostly false. Lets say that the double taxation on dividends issue in effect increases the capital gains tax rate to say 15.1% or so. Whoptie do.
Your "Let's say..." assumption doesn't hold water. These corporations
should be paying 35% tax on those dividends. Of course, they're not because, as you point out, they're too busy finding ways around it. And Congress is too busy to close these legal loopholes. My point is that 35% + 15% = 50%. Don't penalize the individual investor because Congress has, yet again, let big business off the hook.[/QUOTE]
If you lose money overall, you owe no taxes. Losses offset profits.
I own 1000 shares of XYZ stock. I receive $10,000 in dividends over 10 years. I pay 15% tax on those dividends. In year 11, I sell those 1,000 shares for $10,000 less than I paid for it. Assuming I have no offsetting gains, I get to deduct $3,000 (I think) in losses every year until I've used up the $10,000. In the meantime, I've paid tax on $10,000 of dividends that were taxed as income when, in fact, I lost money.
That the thread you are on shows one of the reasons that the double taxation argument doesn't really have much impact. In the case of Romney's money, there was nobody else paying taxes. Bain Capital didn't pay any taxes on the money. They just gave it to Romney and he paid 15% and that was that.
I responded initially to Haymarket's post that no one had posted up any reasons why a 15% capital gains rate made sense. I posted up several. Don't like 'em? It's the best I can do.
I personally think that the favorable treatment of capital gains needs revisiting...for all of the reasons
you've pointed out. Our tax code is a freakin' mess. The capital gains tax is just one area.
Corporate income tax is even more aggregious.