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View Diary: Low capital gains tax rate rewards the rich with no discernible benefit to the larger economy (120 comments)

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  •  the original economic rationale.... (25+ / 0-)

    .... for taxing capital gains lower than ordinary income was that investing was inherently riskier than having a regular job, with a safe income and a pension.

    That rationale no longer holds.

    Investors typically spread out their risk over multiple different investment vehicles.

    Ordinary working stiffs have all their eggs in one basket at a time: concentrated risk.  And ordinary jobs are no longer secure, much less with pensions and so on.

    So in fact, the investor's overall risk exposure is lower than that of the person working at a regular job.

    Therefore the favorable tax treatment for investment income is no longer justified.  

    It's all just income, and it should all be taxed as regular income.  

    At Eisenhower Administration tax rates.  Compromise to Nixon Administration tax rates.  If Republicans don't like that, they can sit on it and rotate.  

    "Minus two votes for the Democrat" equals "plus one vote for the Republican." Arithmetic doesn't care about your feelings.

    by G2geek on Tue Jul 03, 2012 at 03:32:41 PM PDT

    [ Parent ]

    •  Yeah, if we're in a good mood... Nixon levels. ;) (5+ / 0-)
    •  Should be, but never will be. (5+ / 0-)
      It's all just income, and it should all be taxed as regular income.  
      The New Deal was an attempt (very successful, but they didn't know if it would be at the time) to stave off serious revolt. Until there is that existential threat to the powers that own, we will never again have real reform.

      How many divisions does OWS have?

      by Diebold Hacker on Tue Jul 03, 2012 at 05:47:51 PM PDT

      [ Parent ]

      •  oh, i think they darn well knew it. (4+ / 0-)

        Anarchists throwing bombs in the 1910s and 1920s.  

        The Soviet Union proclaiming itself the new workers' paradise, having overthrown the Russian monarchy.

        The Great War (WW1) as recent as 9/11 is to us.  

        And then an economic crash.  The perfect mix for violent revolt with a high likelihood of a Marxist outcome.

        The powers that own damn well knew that they would end up like their counterparts in the Soviet Union unless they gave a little.  So they gave.  A little.  But enough.  

        Fast-forward about a lifetime, to today:  The existential threat to the powers that own, has to come from the workers.  If it comes from anything else, e.g. an asteroid on course for an Earth impact, they will deal with it some other way: e.g. by launching a rocket to nudge the asteroid off track, and then going back to raping & pillaging.

        If the threat comes from the workers, then there is incentive to the plutocracy to buy off the workers' discontent with reforms, the less the better.  

        However we can certainly get changes in the friggin' tax code without having to raise the spectre of a general strike or worse.  

        And on the other hand, what we really need doesn't stop with tweaking the tax code.  What we need is a steady-state economy adapted to life on a strictly finite planet, and by definition that means distributional equity which means social democracy at minimum.  

        So: how to do "pitchforks & torches" nonviolently, or put the big scare into the plutocrats without heads on pikes?  That's where truly creative tactics come into play, the kind of theatrics that look real enough to make an impression on the audience.   I've been ranting about strategy & tactics for years around here, but what we see instead are repeat performances of the obsolete script of "kids vs. cops in the streets."  There needs to be a strong and supported nexus of creative nonviolent tactics operating within a strategic plan.

        "Minus two votes for the Democrat" equals "plus one vote for the Republican." Arithmetic doesn't care about your feelings.

        by G2geek on Tue Jul 03, 2012 at 06:54:29 PM PDT

        [ Parent ]

    •  And, how hard could it be to write a progressive (2+ / 0-)
      Recommended by:
      jrooth, DrPlacebo

      Capital Gains tax schedule.

      Sure ... exempt the first ...  I dunno ...  $120.000/yr from ANY Capital Gain tax -- in other words exempt the first profits of start-up businesses so as to "encourage investment"  while at the same time "protecting the investment income" of savers and retirees.

      But the Ownership Class certainly ARE fond of their Casino Capitalism.

      I'm remembering The Gamesters of Triskelion  

      what DID they need all those Quatloos for, anyway?

      •  I'd be all for this. (0+ / 0-)

        Exempting some amount of capital gains to encourage investment, and taxing the rest as regular income, would serve the purposes that Republicans claim to care about while curbing abuses. $120,000 seems to me to be a little high for an exemption, but the idea's a solid one.

        If your investments are making 6-figure profits, then you don't need the tax breaks to encourage you to invest.

    •  That is totally untrue (0+ / 0-)
      the original economic rationale.... (25+ / 0-)
      .... for taxing capital gains lower than ordinary income was that investing was inherently riskier than having a regular job, with a safe income and a pension.
      Where do you get this from?  I've never heard this claim before.

      The rationales for taxing capital gains lower than income are:
      1. We want to encourage investment
      2. Capital gains are from investment on already taxed income.  (ie. let's say I get paid $1,000 in salary and then invest that in a company to get a capital gain of 100%.  Tax free I would end up with $2,000.  But if I have a 30% tax on income and a 30% tax on capital gains then after tax I end up with only $1,190).  So two 30% taxes leave me with only 59.5% of what I would have had with no tax.

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