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View Diary: On day of Mitt Romney's tax release, poll finds widespread support for raising taxes on the 1% (59 comments)

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  •  Just so you know, the idea behind taxing (0+ / 0-)

    capital at a lower rate than labor is to incentivize people to save and invest. Secondly, it's to better allocate government's costs to the people benefitting from government's benefits.

    I wouldn't mind a higher rate on capital gains and dividends, but I'd like to see the first $250k or so of investment income stay at a low tax rate for people who have regular income. Or maybe tie the two together. Up to 5x normal income (capped at $250k) of investment income can remain at a low tax rate. Then the rate scales up from there...

    •  Wrong. The reason behind a lower capital gains (1+ / 0-)
      Recommended by:
      tofumagoo

      rate is so the rich do not have to pay more in taxes.   It was a change that the Bush II administration made specifically to help the people who would benefit most from it -- the rich (a.k.a, themselves and their benefactors.)

      And, your second comment about better allocating cost to people benefiting from the government is so backwards it makes my head hurt.  What does tax on investment income have to do with using government services?  Are you saying that people with wage income (i.e., "workers") are more likely to use government services than people with investment income?  Of course they are!  The poor and middle class are more likely to make their income from wages than from investments because if they had investments they wouldn't be poor.

      The rich should pay more because they have already won life's lottery.  They're the lucky ones, so they get to pay more.

      Income earned off of financial investments (as opposed to investments in physical assets directly) should be taxed at a higher rate than income earned from wages and investment in physical assets.  It is only through the transformation of raw material that an economy creates growth and wealth.  We, as a society, should value work and create incentives for people to contribute to their work and ingenuity through a lower tax rate.  

      By contrast, investments in financial instruments do very little to help benefit or improve society.  Only indirectly, through financing other people's ingenuity and hard work, does it make the country better.  

      Investment in physical assets (property, plants and equipment) should be taxed lower than gains on financial investments because investment in physical assets creates the opportunity for companies to grow and create jobs, which in turn allows other people to contribute their skills and labor.  And, wages should be taxed lowest of all.

      •  Well, a few points... (0+ / 0-)

        First, capital gains and dividend taxes have been around for a lot longer than Bush II. While his cuts to these rates certainly benefitted the rich disproportionately, this isn't the framing that Bush was using to make the decision. The framing he's using is that the top 1% pay like 40% of all taxes the government gets. And they certainly don't get 40% in benefits from the government back. The top 10% pay 70% of all income tax (the federal government's primary method of revenue). So it's a fairness issue.

        Now, obviously, there is some degree of welfare and support for the poor that our government is going to do at the expense of rich people. But ultimately, this is an injustice. It's just an injustice we're willing to live with because it has good effects. It is good that kids everywhere have a shot at getting a free high school education. Yes, the rich people who probably are paying for their kids' private school and your kids' public school may not particularly like it, but it's what works best for the country. Anyway, the point is that when this imbalance grows too much, the injustice level becomes too difficult to swallow for the rich, and they use political avenues to change policy - like electing Bush II.

        The rich should pay more because they have already won life's lottery.  They're the lucky ones, so they get to pay more.

        Next point, life isn't a lotto. It has some elements of one (I know, I'm young and I just survived a pulmonary embolus). Still, unless you win powerball, you don't get $100M via luck. You have to be skilled. If we want to start taxing the shit out of lotto winners, I'm fine with that. But considering that people like Romney do actually earn their money in a market (by fixing failing companies, or trying to, or slicing them up into worthwhile parts), it's hard to maintain the notion that he got where was was just by luck. And because it wasn't just luck, it makes sticking him with a huge chunk of the country's bills kinda unfair.

        By contrast, investments in financial instruments do very little to help benefit or improve society.

        And in Romney's case, he didn't just invest. He went in as management consultants and actually changed companies. And consequentially the market value of those companies improved, generally. Except when he failed, in which case he was out a tremendous amount of money.

        And by the way, investment in financial instruments will be how we transition to a society in which we automate almost everything and we get to live in peace doing whatever we want with all of our needs being met. You don't realize the importance of the ownership stake.

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