Obama-nomics- increase 15% Capital gains to 28%

[kaydee457 13]

Is anyone surprised that the Obama's have never held any position that would give them a "business" perspective?

The consensus in this discussion is that the Obama's have little or no experience with economics.

Here's a video of a discussion of Obama-nomics on CNBC.....

CNBC discussions

Obama's Cap Gains Calamity

[one...two...tree 2,762]

It was at 28 percent when Bill Clinton was in office and yet you voted for him anyway, yes?

...also, did reducing the capital gains tax actually do what Reagan claimed it would do? (increase tax revenue)

[GaryC 7]

It was at 28 percent when Bill Clinton was in office and yet you voted for him anyway, yes?

...also, did reducing the capital gains tax actually do what Reagan claimed it would do? (increase tax revenue)

Yes it did.

[kaydee457 13]

It was at 28 percent when Bill Clinton was in office and yet you voted for him anyway, yes?

...also, did reducing the capital gains tax actually do what Reagan claimed it would do? (increase tax revenue)

Yes, and yes...I had to answer this?

[one...two...tree 2,762]

from Economist's View:

Alan Blinder: Low Capital Gains Taxes Cause Distortions

Alan Blinder discusses distortions that are introduced into the economy when the tax rate on capital gains is lower than the tax rate on other types of income. He begins by explaining the current debate over whether income from private-equity and hedge fund management should be taxed as capital gains or as regular income, and comes down on the side of treating it like ordinary income (see the article for details), and then he asks why the rates should differ at all:

The Under-Taxed Kings of Private Equity, by Alan S. Blinder, Economic View, NY Times: An arcane debate is raging in Congress over the appropriate taxation of the bountiful incomes of people who manage private-equity and hedge funds — incomes that can range into the hundreds of millions a year. I don't recommend trying to master the details unless you have either an accounting degree or insomnia. But one thing is easy to understand, though hard to swallow: Some people who are richer than Croesus are paying 15 cents in federal income taxes on the marginal dollar, while you may be paying 25 or 35 cents...

Why do we have a preference for capital gains in the first place? The main argument is that lower taxes on capital gains boost investment. But the evidence on that point is iffy at best, and there are better ways to spur investment, like, say, the investment tax credit. Besides, lower taxes on capital gains reduce the tax bills of the rich relative to the rest of us — after all, they own most of the capital. But in this age of hyper-inequality, shouldn't we be making the tax code more progressive, not less?

A far more important objection is that the tax preference for capital gains undermines capitalism — a system in which capitalists, not the state, are supposed to make the investment decisions. When I discuss this issue with my Economics 101 students, I show them an example of a proposed investment that loses money before tax (and which, therefore, should be rejected) but which actually turns a profit after tax because of the preferentially low capital gains rate. ... The government thus induces people to make bad investments, which is a good way to run an economy into the ground. Come to think of it, that's just what the old Soviet Union did. It invested copiously, but badly.

But would taxing capital gains like other types of income imperil our economy? No. The Tax Reform Act of 1986 did exactly that, and it did not end capitalism as we know it. In fact, the gross domestic product in 1987 and 1988 grew at about the same rate as in 1985 and 1986, and the investment share of G.D.P. barely budged.

As the tax debate unfolds, you may find it difficult to follow the mind-numbing complexities. Who doesn't? So just remember one simple principle: If we tax Activity A at 15 percent and Activity B at 38 percent, a free-market economy will give us more A and less B. Some of this shifting will represent genuine movements of resources out of B and into A — including those bad investments I just mentioned. The rest will be paper manipulations devised to avoid taxes.

http://economistsview.typepad.com/economis...blinder-lo.html

[GaryC 7]

Here is a very good study about the effects of tax cuts and the result on the economy and federal revenues. There is a clear correlation to lower taxes spurring the economy and raising the intake of funds to the government. Tax increases actually lower federal revenues, raise the deficit and hurt everyone rich and poor alike. I wish the dems could get that through their thick heads.

http://dreier.house.gov/pdf/IPI%20-%20CapGainsKey.pdf

[GaryC 7]

from Economist's View:

Alan Blinder: Low Capital Gains Taxes Cause Distortions

Alan Blinder discusses distortions that are introduced into the economy when the tax rate on capital gains is lower than the tax rate on other types of income. He begins by explaining the current debate over whether income from private-equity and hedge fund management should be taxed as capital gains or as regular income, and comes down on the side of treating it like ordinary income (see the article for details), and then he asks why the rates should differ at all:

The Under-Taxed Kings of Private Equity, by Alan S. Blinder, Economic View, NY Times: An arcane debate is raging in Congress over the appropriate taxation of the bountiful incomes of people who manage private-equity and hedge funds — incomes that can range into the hundreds of millions a year. I don't recommend trying to master the details unless you have either an accounting degree or insomnia. But one thing is easy to understand, though hard to swallow: Some people who are richer than Croesus are paying 15 cents in federal income taxes on the marginal dollar, while you may be paying 25 or 35 cents...

Why do we have a preference for capital gains in the first place? The main argument is that lower taxes on capital gains boost investment. But the evidence on that point is iffy at best, and there are better ways to spur investment, like, say, the investment tax credit. Besides, lower taxes on capital gains reduce the tax bills of the rich relative to the rest of us — after all, they own most of the capital. But in this age of hyper-inequality, shouldn't we be making the tax code more progressive, not less?

A far more important objection is that the tax preference for capital gains undermines capitalism — a system in which capitalists, not the state, are supposed to make the investment decisions. When I discuss this issue with my Economics 101 students, I show them an example of a proposed investment that loses money before tax (and which, therefore, should be rejected) but which actually turns a profit after tax because of the preferentially low capital gains rate. ... The government thus induces people to make bad investments, which is a good way to run an economy into the ground. Come to think of it, that's just what the old Soviet Union did. It invested copiously, but badly.

But would taxing capital gains like other types of income imperil our economy? No. The Tax Reform Act of 1986 did exactly that, and it did not end capitalism as we know it. In fact, the gross domestic product in 1987 and 1988 grew at about the same rate as in 1985 and 1986, and the investment share of G.D.P. barely budged.

As the tax debate unfolds, you may find it difficult to follow the mind-numbing complexities. Who doesn't? So just remember one simple principle: If we tax Activity A at 15 percent and Activity B at 38 percent, a free-market economy will give us more A and less B. Some of this shifting will represent genuine movements of resources out of B and into A — including those bad investments I just mentioned. The rest will be paper manipulations devised to avoid taxes.

http://economistsview.typepad.com/economis...blinder-lo.html

This is working on the class envy theory and not sound economics. The idea that the rich do not pay enough taxes is really dumb. The top 5% already pay the majority of taxes.

This also leaves out the fact that federal revenue increased during the time the rate was reduced. Tax cuts work.

[Mr. Big Dog 10,747]

Why should passive income be taxed at a lower rate than earned income?

[GaryC 7]

Why should passive income be taxed at a lower rate than earned income?

Why shouldn't it? The money does not belong to the government, it belongs to the people. The idea that every single cent that changes hands should have a cut to the government is terrible. A person takes a risk and makes money. The government shouldn't have it's hand out every time someone makes a buck.

[Mr. Big Dog 10,747]

Why should passive income be taxed at a lower rate than earned income?

Why shouldn't it? The money does not belong to the government, it belongs to the people. The idea that every single cent that changes hands should have a cut to the government is terrible. A person takes a risk and makes money. The government shouldn't have it's hand out every time someone makes a buck.

You're rambling about taxes in general but you're not actually answering the question.

[GaryC 7]

Why should passive income be taxed at a lower rate than earned income?

Why shouldn't it? The money does not belong to the government, it belongs to the people. The idea that every single cent that changes hands should have a cut to the government is terrible. A person takes a risk and makes money. The government shouldn't have it's hand out every time someone makes a buck.

You're rambling about taxes in general but you're not actually answering the question.

My answer? I think the entire tax code should be scrapped. Money made on investments shouldn't be taxed at all. A tax on consumption should be the governments only way of taxing us. If not that then a flat tax at the same rate for everyone. This idea of progressive taxes and taxing the rich more than anyone else stinks.

[kaydee457 13]

Why should passive income be taxed at a lower rate than earned income?

Why shouldn't it? The money does not belong to the government, it belongs to the people. The idea that every single cent that changes hands should have a cut to the government is terrible. A person takes a risk and makes money. The government shouldn't have it's hand out every time someone makes a buck.

You have that right! That's clearly socialist doctrine- but wait, Barack and Hillary are socialist, aren't they?

Edited March 30, 2008 by kaydee457

[HAL 9000 96]

Damn socialists. Must nuke 'em...

Really... ?

It would be great if a VAT would get pushed through and the IRS were dismantled. Then we'll see how income really gets taxed fairly... LOL.

[Mr. Big Dog 10,747]

Why should passive income be taxed at a lower rate than earned income?

Why shouldn't it? The money does not belong to the government, it belongs to the people. The idea that every single cent that changes hands should have a cut to the government is terrible. A person takes a risk and makes money. The government shouldn't have it's hand out every time someone makes a buck.

You're rambling about taxes in general but you're not actually answering the question.

My answer? I think the entire tax code should be scrapped. Money made on investments shouldn't be taxed at all. A tax on consumption should be the governments only way of taxing us. If not that then a flat tax at the same rate for everyone. This idea of progressive taxes and taxing the rich more than anyone else stinks.

With the current tax code and rates, we're taxing the rich less than those that work for their money. That is what stinks.

[kaydee457 13]

Why should passive income be taxed at a lower rate than earned income?

Why shouldn't it? The money does not belong to the government, it belongs to the people. The idea that every single cent that changes hands should have a cut to the government is terrible. A person takes a risk and makes money. The government shouldn't have it's hand out every time someone makes a buck.

You're rambling about taxes in general but you're not actually answering the question.

My answer? I think the entire tax code should be scrapped. Money made on investments shouldn't be taxed at all. A tax on consumption should be the governments only way of taxing us. If not that then a flat tax at the same rate for everyone. This idea of progressive taxes and taxing the rich more than anyone else stinks.

With the current tax code and rates, we're taxing the rich less than those that work for their money. That is what stinks.

The fact is that the "rich" pay 70% of the taxes now.

Umm, please cite sources for your contentions...

Under Obama and Hillary's doctrine, I'm the rich, and possibly so are you!

What, if anything has this to do with the topic of this post. There's a discussion going on on MSNBC whereby the consensus is that the Obama's are simply inept, and out of touch with the reality of business economics as well as the fact that ordinary Americans are mostly vested in the stock market via 401k's,as well as the equity in their homes, and the Obama's have declared fair game to tax more and more of this source of family based wealth, based on their own stupidity and ignorance, hopefully ignorance else they're arrogant socialist morons!

Wait, wait, of course they are!