The Millionaires Who Pay the Highest Tax Rate

Gipper said:

When the IRS gives money back to investors for capital losses, then we'll negotiate.

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Why would they do that? I mean what is the structure you're trying to super-impose by talking about lIRS refunding investors' money?

Gipper said:

Look at it like this: capital gains are essentially taxed at 15%, and capital losses are taxed at 100% rate.

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When I losse money on an investment, I have to pay the gov an amount equal to what I lost?
I find that hard to believe.
I think that you might be confused or otherwise in error.

j-mac said:

Nothing yet, but at least you tried....Look, what would you ascribe to this statement...

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A working knowledge of arithmetic?

I think the "punishing success" bit come from your side of the key board and is not inherent in the post.

I was being facetious. I'm saying that capital losses, from a firsthand perspective, are the same as paying a 100% tax insofar that you have nothing (other than a write-off).

This is why I invoked risk. It's a lower rate because capital gains can easily be capital losses, meaning that it's a reflection of risk premiums (on a macro level). If you go to work for 40 hours a week at an establishment, the likelihood of you receiving a paycheck for that work is around 100%. For income subjected to CGT, there is a chance that anything you invest could magically disappear. It seems foolish to apply the same tax rate for both types of income when there is a huge risk disparity.

Gipper said:

I was being facetious. I'm saying that capital losses, from a firsthand perspective, are the same as paying a 100% tax insofar that you have nothing (other than a write-off).
This is why I invoked risk. It's a lower rate because capital gains can easily be capital losses, meaning that it's a reflection of risk premiums (on a macro level). If you go to work for 40 hours a week at an establishment, the likelihood of you receiving a paycheck for that work is around 100%. For income subjected to CGT, there is a chance that anything you invest could magically disappear. It seems foolish to apply the same tax rate for both types of income when there is a huge risk disparity.

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Since the losses are not taxed, only the gains are taxed, why does the risk make a difference?

Simon W. Moon said:

Since the losses are not taxed, only the gains are taxed, why does the risk make a difference?

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Risk always makes a difference. This is why portfolios are diverse, and you won't see them based mostly on investments that are volatile. A good portfolio should be 50% stable securities at the very least. High profit investment tools should be the tip of an iceberg. Why do you think that municipal bonds tend to have lower rates? They're tax exempt. Makes sense, don't you agree?

Gipper said:

Risk always makes a difference. This is why portfolios are diverse, and you won't see them based mostly on investments that are volatile. A good portfolio should be 50% stable securities at the very least. High profit investment tools should be the tip of an iceberg. Why do you think that municipal bonds tend to have lower rates? They're tax exempt. Makes sense, don't you agree?

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You're not actually explaining about why income derived from a riskier activity should be counted differently than income derived from a less risky one. At least not afaict.

Yeah...I don't really feel like breaking out CAPM models and so on. We'll end the discussion here.

TheNextEra said:

Ah yes, the tired mantra from the right that the rich are getting punished. Yep, they sure look like they are SOOOO punished. :roll:

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Oh, so they are supposed to look as if they have just lived through the equivalent of the Big Crash eh? Maybe that is what you want, maybe in your own way you really want to see people economically above your own status brought down a peg or two....I don't know, but it sure isn't anything to do with what this country was built on.

Seems you like using class warfare for the rich. And before you try another tired post suggesting I don't pay my fair share, I pay more than that but I'm not complaining like some whining ass baby like the right are.

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I don't know if you are wealthy, but I am not. I have laid out many times for all to see, that I am demographically solid middle class, two income below $100K. But if you are telling us that you are paying more than you are required to do, then good for you. I simply can not afford to do that, and to tell the truth, considering the way DC wastes money, I wouldn't.

However, the class warfare is not in advocating a lower tax burden in tough economic times, but in that argument that states that taxing the well off as a means to solve our problems without spending being addressed first, or that somehow the $80 bn per year would solve deficits of $1.4 tn is what class warfare looks like to me.

We live in the greatest country in the world, even with the tax rates the way they are now, if you feel otherwise maybe you and others should consider moving to a more "fair" country. Don't let the door hit your ass on the way out!

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I agree that we live in the greatest country in the world, but if your argument of fair is stealing the wealth of the well off, to give to those who contribute nothing to the system then it isn't me that should be searching expedia my friend.

j-mac said:

Nothing yet, but at least you tried....Look, what would you ascribe to this statement...



What's fair is fair, we are supposed to be "equal under the law".... A progressive taxation system doesn't do this.

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That's because you don't see the underlying measure of economics. You are seeing economics through dollars and cents, but dollars and cents are representative of value, which ultimately is used to purchase a certain standard of living. In reality, we should be (and generally are) taxing people in a manner of shared suffering, not based on a percentage of income. The problem with your argument is that you are assuming that a dollar is static in value, but it's not. A dollar has relative value. Relative to the time period you are assessing, relative to the world economy in whole, and relative to the person who holds it. In short, $1 to Warren Buffett does not have the same relative value aas $1 to someone on Welfare. Losing that dollar would do much more harm on the poorer of the two.

Gipper said:

Yeah...I don't really feel like breaking out CAPM models and so on. We'll end the discussion here.

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Good that you're saving that, because that still doesn't address the question of why one set of money should be treated differently from another in re taxes.

Yes, you're discussing risk, money and taxes, but you're not really hitting the question. afaict anyway.

Simon W. Moon said:

Good that you're saving that, because that still doesn't address the question of why one set of money should be treated differently from another in re taxes.

Yes, you're discussing risk, money and taxes, but you're not really hitting the question. afaict anyway.

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The government rewards investments in this way, which is a direct result of risk. You have to incentivize it, or else the risk/reward ratio simply does not benefit the average investor.

Gipper said:

The government rewards investments in this way, which is a direct result of risk. You have to incentivize it, or else the risk/reward ratio simply does not benefit the average investor.

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It seems that it only allows marginally riskier investments to have an easier time raising funds.

Our definitions of "marginally" differ greatly.

JRog said:

That's because you don't see the underlying measure of economics. You are seeing economics through dollars and cents, but dollars and cents are representative of value, which ultimately is used to purchase a certain standard of living. In reality, we should be (and generally are) taxing people in a manner of shared suffering, not based on a percentage of income. The problem with your argument is that you are assuming that a dollar is static in value, but it's not. A dollar has relative value. Relative to the time period you are assessing, relative to the world economy in whole, and relative to the person who holds it. In short, $1 to Warren Buffett does not have the same relative value aas $1 to someone on Welfare. Losing that dollar would do much more harm on the poorer of the two.

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Again I will ask you specifically a simple question....Do you see the tax code as a tool to punish wealth?

We can not expect universal agreement on anything.
Ain't that the truth....Lately I think if not only for the contrarian value of it.
••I'm trying to think of ANYTHING that EVERYONE has ever agreed on

When we vote, we are choosing the ones who make these decisions on our behalf. Some will agree and some won't.
Really? Why that's brilliant....I had no Idea....
••That's why they pay me the big bucks. Not just a genius but damn near a deity

There are many high income people who are comfortable with higher taxes and some who are vehemently opposed.
Well, let the high income people so willing to give others money away, stroke that check themselves...They can do so now you know....
••Would be nice if we could all pay our own chosen tax rates but lets stick to at least an element of realuty

By having a "government" we have delegated this authority, for better or worse.
Yep, and they are supposed to answer to us, not the highest bidder.
••Nobody agrees more that our politicians are corrupt and self-serving. They are secure in their positions. Congress approval rating = 10%. Incumbent re-=election rate = 90%. So which "us" are they answering to?

We can only hope that these powers will be used wisely.
You mean like when they ram through a trillion dollar stimulus that gets wasted on crony's and green energy pipe dreams, then laughed about later?
•• Definitely not a case of wisdom IMHO and it wasn't done by just one party, anymore so than say "The Patriot Act". This is the byproduct of corruption.

Definitely, they are usually used unwisely as far as I'm concerned but our social contract compels me to comply with these decisions.
No, there are remedies, but the most recent one, the stupidity won over the rational.
••Then it wasn't a remedy, was it? Also, I don't think we were offered much of a choice. One rock, one hard place.

n the case of the proposed tax modifications, I think you'll be surprised at the substantial percentage that will agree. INHO, the amounts involved can be described as unfortunate, but not catastrophic.
The level of catastrophe will be in the eye of the beholder....
••This beholder does not believe that an increase of 6.5% of income in excess of $250K will be only unfortunate, not catastrophic. When I see declamations like 100% tax I have trouble connecting the 2 concepts. I paid 40.5% throughout the Clinton era and survived it quite nicely.

j-mac said:

Ain't that the truth....Lately I think if not only for the contrarian value of it.



Really? Why that's brilliant....I had no Idea....:lol:



Well, let the high income people so willing to give others money away, stroke that check themselves...They can do so now you know....



Yep, and they are supposed to answer to us, not the highest bidder.



You mean like when they ram through a trillion dollar stimulus that gets wasted on crony's and green energy pipe dreams, then laughed about later?



No, there are remedies, but the most recent one, the stupidity won over the rational.



The level of catastrophe will be in the eye of the beholder....

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j-mac said:

Again I will ask you specifically a simple question....Do you see the tax code as a tool to punish wealth?

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a review of his posts suggests that is the case

j-mac said:

Again I will ask you specifically a simple question....Do you see the tax code as a tool to punish wealth?

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I think that's a ridiculous question. Asking a wealthy person to pay an appropriate tax rate to ensure that everyone suffers the same is not punishing them. A similar question to you would be, do you think that the tax code should coddle the wealthy?

TurtleDude said:

a review of his posts suggests that is the case

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The tax code is a way for the uber-wealthy to throw obstacles at those trying to join their club. The super wealthy pay an overall significantly lower rate then most other people. But in the gap between rich and uber rich, you get whacked. The tax rate on $100 million invested between 15% cap gains and dividends and tax exempted munis is a heck of a lot less then what someone like me pays on earned income.

JRog said:

I think that's a ridiculous question. Asking a wealthy person to pay an appropriate tax rate to ensure that everyone suffers the same is not punishing them. A similar question to you would be, do you think that the tax code should coddle the wealthy?

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in other words yes. appropriate has no meaning. the base line is people should pay for what they use. the rich pay far more than that the tax code is blatantly unfair to the rich based on value received

obvious Child said:

The tax code is a way for the uber-wealthy to throw obstacles at those trying to join their club. The super wealthy pay an overall significantly lower rate then most other people. But in the gap between rich and uber rich, you get whacked. The tax rate on $100 million invested between 15% cap gains and dividends and tax exempted munis is a heck of a lot less then what someone like me pays on earned income.

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I agree. the uber wealthy support progressive income taxes and death taxes since it impedes access to the uber wealthy club.

a351 said:

Pick up a history book or two. You might find that Ike, JFK, Reagan and Clinton were flaming commies as well. Or you could develop a sense of nuance in lieu of reactionary caterwauling.

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JFK and Reagan were commies? Lolz. I'd probably buy Clinton and Ike have socialist leanings. However, I read the other two names on that list and thought some of the marijuana I use to smoke had come back to haunt me.

JRog said:

As a result of technological breakthroughs, the addition of women in the workplace, and extension and regularity of credit. The decreases in capital gains taxes followed the growth of consumerism to provide the capital for growth, not the demand required for it.

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As a result of increased activity in trade markets due to lowering capital gains taxes.

TurtleDude said:

in other words yes. appropriate has no meaning. the base line is people should pay for what they use. the rich pay far more than that the tax code is blatantly unfair to the rich based on value received

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Not really. If you are buying insurance on 15 multi-million dollar homes, would you pay more than someone who only has one home or someone who rents? The answer is yes, because you stand to lose more in the event of disaster. As such, a wealthy person benefits far more from military, police and fire protection than a poor person. They also, through their businesses, have much greater interest in overseas business than a poorer person. They benefited more from the wars in the middle east, as their companies, or those which they have ownership interest made a lot of money through rebuilding.

They also benefit more from FDIC insurance, and have much greater individual control of our politicial system through their financial contributions to politicians.

Additionally, wealthy people use the court system much more than poor people, both personally and through their businesses. Through their businesses and business ownership, they use the roads, import/export facilities and legal system.

So, no, wealthy people don't use less or the same of the governmental "commons" as everyone else.

jonny5 said:

As a result of increased activity in trade markets due to lowering capital gains taxes.

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No....the purchase of stock has never caused a business to grow. As I stated above, capital investment is not revenue, and companies don't grow due to capital investment. If you owned a business with demand of 100 widgets per month, and you were meeting or exceeding that demand, and I offered to invest in your business, would you expand to produce 200 widgets when demand is still 100? Remember that I didn't GIVE you money, I lent it to you for ownership interest, and now own a part of your revenue.

In an economy where demand exceeds production capability, yes a lower capital gains tax migh (and I stress MIGHT) help, but in reality if a business deal is good, a tax impact of 3% is not going to dissuade anyone from investing. In our economy, demand is low.

JRog said:

No....the purchase of stock has never caused a business to grow. As I stated above, capital investment is not revenue, and companies don't grow due to capital investment. If you owned a business with demand of 100 widgets per month, and you were meeting or exceeding that demand, and I offered to invest in your business, would you expand to produce 200 widgets when demand is still 100? Remember that I didn't GIVE you money, I lent it to you for ownership interest, and now own a part of your revenue.

In an economy where demand exceeds production capability, yes a lower capital gains tax migh (and I stress MIGHT) help, but in reality if a business deal is good, a tax impact of 3% is not going to dissuade anyone from investing. In our economy, demand is low.

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Lowering capital gains results in new investment, dividends, and business activities which increase shareholder value.