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US Tax law - Capital Gains

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Re: US Tax law - Capital Gains
Post by kbus888   » Mon Jan 07, 2013 12:18 pm

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Hi biochem

Amen !!

R

biochem wrote:
A flat tax sounds simple, but there must be some disadvantages to it. not an economist, but there must be more besides the disadvantages it heaps on the poorest compared to the richest.


Most serious flat tax proposals I have seen have a floor. The actual numbers vary but are usually something like $20,000 per person and a 20% tax rate above that.

- a couple earning $25,000 would pay nothing
- a couple earning $50,000 would pay tax on $10,000
- a couple earning $1 million would pay tax on $960,000

That sort of scheme would make it fair to the poor, especially when most proposals also include few or no exemptions. Right now the highest earners have all sorts of exemptions, loopholes etc buried in the 1000s of pages of current tax laws that they can use to pay much less than the nominal rate. And currently the really rich: the corporate CEOs, the hedge fund managers, the trust fund babies etc have the vast majority of their income as investment income which is only taxed at 14%.

The biggest disadvantage (and the reason why it will never be passed) is political. Politicians love money and power and control of the tax code gives them both. The rich donate LOTs of money to campaigns to ensure that their favorite loopholes remain. Plus playing with the tax code gives politicians a way to control people for good or ill and they love that power. If you favor green energy - put in a tax credit for it etc etc.
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Re: US Tax law - Capital Gains
Post by biochem   » Sun Jan 27, 2013 5:31 am

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New article on CNN.com about this topic.

Basically comparing Mickelson's complaints about his tax rate of about 60% to the 14% tax rate of Mitt Romney and Warren Buffett.


http://www.cnn.com/2013/01/25/opinion/m ... ?hpt=op_t1
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Re: US Tax law - Capital Gains
Post by kbus888   » Wed Mar 13, 2013 12:15 am

kbus888
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Hi guys

?? How about an income "flat tax" with a single exemption ??

The first $20,000 yearly income is tax-free.

ALL remaining income taxed at 20%.

No other exceptions or deductions at all.

(I know, I know - - - this would adversely affect incomes of Tax Lawyers and Chartered Accountants since no specialists would be needed to explain the law to us poor ignorant citizens) !!

?? Comments ??

R

Edited 1 time to correct typos
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(/(..^..)\)
.._/'*'\_
.(,,,)^(,,,)

Love is a condition in which
the happiness of another
is essential to your own. - R Heinlein
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Re: US Tax law - Capital Gains
Post by rmsgrey   » Wed Mar 13, 2013 9:20 am

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kbus888 wrote:Hi guys

?? How about an income "flat tax" with a single exemption ??

The first $20,000 yearly income is tax-free.

ALL remaining income taxed at 20%.

No other exceptions or deductions at all.

(I know, I know - - - this would adversely affect incomes of Tax Lawyers and Chartered Accountants since no specialists would be needed to explain the law to us poor ignorant citizens) !!

?? Comments ??

R

Edited 1 time to correct typos


A major legitimate use of tax deductions is to encourage more-efficient private interests to run projects the government would otherwise have to fund directly. If Bill Gates builds a school, it gets done more cheaply and to higher standards than if local government, with all its red tape, did it, and letting Bill count the cost of the school as part of his taxes means he's no worse off financially than if he'd just handed over the money.

Tax breaks are one of central government's more effective tools for promoting behaviours of which they approve (like lobbying by buying a congressman an expensive dinner) - of course, behaviour of which elected politicians approve and behaviour of which the general public, who don't get invited to dinner, approves are sometimes two very different things...
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Re: US Tax law - Capital Gains
Post by kbus888   » Wed Mar 13, 2013 1:48 pm

kbus888
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Posts: 1980
Joined: Mon May 02, 2011 11:58 pm
Location: Eastern Canada

Hi rmsgrey

You indeed have a valid point.

But politicians (at least the ones I've read about) are more interested in ensuring their re-election than in taking decisions that will benefit their electorate.

So, might it not be possible they will be more interested in using the tax breaks to their friends ??

R



rmsgrey wrote:
kbus888 wrote:Hi guys

?? How about an income "flat tax" with a single exemption ??

The first $20,000 yearly income is tax-free.

ALL remaining income taxed at 20%.

No other exceptions or deductions at all.

(I know, I know - - - this would adversely affect incomes of Tax Lawyers and Chartered Accountants since no specialists would be needed to explain the law to us poor ignorant citizens) !!

?? Comments ??

R

Edited 1 time to correct typos


A major legitimate use of tax deductions is to encourage more-efficient private interests to run projects the government would otherwise have to fund directly. If Bill Gates builds a school, it gets done more cheaply and to higher standards than if local government, with all its red tape, did it, and letting Bill count the cost of the school as part of his taxes means he's no worse off financially than if he'd just handed over the money.

Tax breaks are one of central government's more effective tools for promoting behaviours of which they approve (like lobbying by buying a congressman an expensive dinner) - of course, behaviour of which elected politicians approve and behaviour of which the general public, who don't get invited to dinner, approves are sometimes two very different things...
..//* *\\
(/(..^..)\)
.._/'*'\_
.(,,,)^(,,,)

Love is a condition in which
the happiness of another
is essential to your own. - R Heinlein
Top
Re: US Tax law - Capital Gains
Post by thinkstoomuch   » Wed Mar 13, 2013 4:11 pm

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Seeing as the title is tax law. Politicians write the laws (supposedly) this is the biggest reason that big government fails, IMO. Get the politicians all living in an echo chamber something like Washington, DC and the citizens are no longer heard.

Go to a town meeting when increasing taxes comes up. The politicians have to justify why. Amazingly enough when it is for (insert reason, can be just about anything) the citizens actually know where there money is going and they will be more likely to vote yes. Some nebulous "them" getting taxed they don't care (or worse the Robin Hood syndrome kicks in) or some other nebulous them getting their tax dollars ...

Yeah not much about capital gains but that is why the US tax code is a train wreck in progress. Politicians too far from their constituents, IMO.

Have fun,
T2M

kbus888 wrote:Hi rmsgrey

You indeed have a valid point.

But politicians (at least the ones I've read about) are more interested in ensuring their re-election than in taking decisions that will benefit their electorate.

So, might it not be possible they will be more interested in using the tax breaks to their friends ??

R
-----------------------
Q: “How can something be worth more than it costs? Isn’t everything ‘worth’ what it costs?”
A: “No. That’s just the price. ...
Christopher Anvil from Top Line in "War Games"
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