Tea Party less popular than atheists and Muslims

[mawilson 2,133]

Don't be silly.

It's $3K writeoff against EARNED INCOME (if you had no cap gains to write off against)

But it's dollar for dollar write off against future gains.

Lose 1M this year, make 2M next year, you'll pay tax only on the net 1M gain next year and write the whole loss off.

That's true.

[Robert&Karen 264]

No one wants to lose $1M. I'd rather have the $1M and pay taxes on it!

[scandal 951]

That's true.

I never claimed he did, that was scandal:

I actually think he's wrong - despite the regressive nature of FICA taxes, the rich still pay more taxes as a percentage of their income.

How could they not? Mathematically speaking, as their income approaches infinity, the effective tax rate converges to 35 percent.

Of course, many wealthy individuals and taxpayers who own pass-through taxation businesses (such as LLCs) benefit from being able to reduce their taxable income by expenses they incur as part of business operations, but that's another story.

And I continue to believe I'm right.

I'm sure there are many wealthy Americans who do earn employment income and pay the highest marginal income tax rate on a substantial part of their income - Hollywood actors and professional athletes come to mind. They will certainly pay a higher percentage than those in a lower top marginal bracket.

But, as pointed out in Buffett's recent op-ed, there are many wealthy Americans who earn most (if not all) their income from investments, not employment. And there your comment about 35% bracket does not apply. Many of them, particularly those investing in complex structures such as hedge funds, take advantage of tax rules that levy only a 15% tax even on short term gains. That results in men like Buffett paying a lower percentage of his income in taxes than his secretary.

Here's a neat visualization. The sort of thing I know AJ would love.

Follow the link for more info about it.

http://www.datapointed.net/2011/03/relative-us-income-taxes-1913-2011/

[Robert&Karen 264]

In that graph the red is going away so it is getting more fair every year.

[mawilson 2,133]

No one wants to lose $1M. I'd rather have the $1M and pay taxes on it!

Some people here will tell you that when a rich person loses $1M, it's no big deal because "they are still rich".

And yes, you're absolutely right - no-one would purposely lose $1M just to offset their gains in future years.

(Unless you realize a loss for tax purposes on Dec 31 and then buy back the stock a month later - a practice known as "wash sale".)

[Robert&Karen 264]

Some people here will tell you that when a rich person loses $1M, it's no big deal because "they are still rich".

And yes, you're absolutely right - no-one would purposely lose $1M just to offset their gains in future years.

(Unless you realize a loss for tax purposes on Dec 31 and then buy back the stock a month later - a practice known as "wash sale".)

Well I loaned a friend $2,000 and he shafted me, but his attitude is that I can afford it, it's only nickels to me. Wrong. But there is no telling him that, because if you have $2k just lying around then someone less fortunate deserves dibs on it apparently.

Losing money and only to get the taxable portion made untaxable and receiving a slightly higher tax refund is bittersweet. And if Warren Buffet to simply vanish into think air tomorrow along with all his assets and ventures, there would be a lot of unemployed people as a result.

[mawilson 2,133]

But, as pointed out in Buffett's recent op-ed, there are many wealthy Americans who earn most (if not all) their income from investments, not employment.

It makes sense to me to tax capital gains at a lower rate if it's money you make from investments in *someone else's* business.

If you "invest" in your own business (like Warren Buffett who is the primary shareholder, chairman and CEO of Berkshire Hathaway), you should be taxed at the ordinary income tax rate.

[Robert&Karen 264]

If you "invest" in your own business (like Warren Buffett who is the primary shareholder, chairman and CEO of Berkshire Hathaway), you should be taxed at the ordinary income tax rate.

Remember that most corporations pay taxes too. This is on top of the income taxes for its owner. No one gets a free ride.

[Zero Sum 305]

The rich should suffer like the poor? Why? Should the rich have the same cheap clunker cars? Should they worry about their next meal? Where is the incentive to achieve then if you work harder and earn more yet receive no rewards for your labors? And the taxes are out of proportion percentage-wise. The rich pay a higher percent.

To someone you are rich. There are people who think you are well off because you have a computer so you should pay more taxes. And I bet if you were told at work you are getting a $10,000 a year raise you would be happy. And then what if you were told it is all being taken away as a tax? Would you say oh well I'm rich it was bound to happen? I think not. I think you can use that money.

Another related example. A few years back here in California they wanted to raise property taxes. My renter loved this idea, you know, stick it to the rich. I told him if my taxes go up $600 a year his rent goes up $50 a month. Where else do the rich get the money? Prices will go up to cover their higher taxes.

I am always willing to discuss topics, but personal attacks get us no where.

I never said they had to suffer like the poor. Please read again. I'm talking about stating proportional levels of taxation based on income. Don't let the point slip by as you ignore tax fact.

[Robert&Karen 264]

Proportional levels based on income....I guess you mean graduated? We have that now for federal and state taxes. Do you want more of the other taxes adjust so they are the same, higher for the rich percentage-wise than for the poor?

As a corollary, aren't we hurting ourselves when American businesses move overseas because of what they consider excessive taxes??

[웃 910]

Proportional levels based on income....I guess you mean graduated? We have that now for federal and state taxes. Do you want more of the other taxes adjust so they are the same, higher for the rich percentage-wise than for the poor?

As a corollary, aren't we hurting ourselves when American businesses move overseas because of what they consider excessive taxes??

[Zero Sum 305]

Proportional levels based on income....I guess you mean graduated? We have that now for federal and state taxes. Do you want more of the other taxes adjust so they are the same, higher for the rich percentage-wise than for the poor?

As a corollary, aren't we hurting ourselves when American businesses move overseas because of what they consider excessive taxes??

No, proportional.

American business does not move overseas, on the whole, to avoid taxes. They go usually seeking higher profit margins which usually exceed taxation by orders of magnitude.

[Sofiyya 1,687]

No, proportional.

American business does not move overseas, on the whole, to avoid taxes. They go usually seeking higher profit margins which usually exceed taxation by orders of magnitude.

You must miss all the documentation about companies that actually don't go anywhere, but just change their corporate hq address to a PO box overseas to avoid US taxes.

Edited August 20, 2011 by Sofiyya

[Zero Sum 305]

You must miss all the documentation about companies that actually don't go anywhere, but just change their corporate hq address to a PO box overseas to avoid US taxes.

And you probably missed my specific use of an entire line of text:

"American business does not move overseas, on the whole, to avoid taxes. They go usually seeking higher profit margins which usually exceed taxation by orders of magnitude."

Nowhere do I refute your argument above as contrarian to mine.

[Zero Sum 305]

You must miss all the documentation about companies that actually don't go anywhere, but just change their corporate hq address to a PO box overseas to avoid US taxes.

Although (from your link):

Houston-based Halliburton

The company, which was once led by U.S. Vice President ####### Cheney, said that its relocation was part of a strategy that it announced in mid-2006 to concentrate its efforts in the Middle East in order to attract business.

Consulting company Accenture is the Bermuda-based arm of the former Big Five accounting firm Arthur Andersen LLP,

The company has argued that its operations should not be called corporate inversion because while Arthur Andersen was based in the U.S., Accenture never was.

Foster Wheeler

The engineering firm Foster Wheeler moved its corporate headquarters to Bermuda in 2001, when the company was headed toward bankruptcy.

and

Nearly 70 percent of Foster Wheeler's business comes from its international operations, and the move to Bermuda enabled the company to avoid paying taxes on income that it earned outside of the U.S.

Ingersoll Rand

In 2007, the company faced an IRS (Internal Revenue Service) audit over the way it classified some debt in its reincorporation in Bermuda in 2002.

Tyco International

In 2002, Tyco International's chairman and CEO, L. Dennis Kozlowski, was indicted on charges that he had evaded more than $1 million in New York sales taxes.