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View Diary: Changing the Narrative to "Tax the Rich!" (26 comments)

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  •  emorej - a transaction tax (7+ / 0-)

    could raise significant revenue, not nearly as much as people think as any transaction tax would end high frequency trading and therefore any expected revenue from that source.

    Significant carried interest, more than $1 million a year, is earned by such a small number of people, I estimate fewer than 1,000, that it would never be a big revenue generator.

    "let's talk about that"

    by VClib on Sat Oct 12, 2013 at 06:52:48 AM PDT

    [ Parent ]

    •  We can debate where and how to raise revenues but (2+ / 0-)
      Recommended by:
      DRo, lcrp

      the diary is about messaging. "Tax the Rich!" is a rallying cry (and a slogan) that an angry electorate (which is what we have here) can digest and relate to. And support.

      What do you think?

      "The Butler." Great Movie! Go see it.

      by TriangleNC on Sat Oct 12, 2013 at 07:11:09 AM PDT

      [ Parent ]

      •  The rich got a big tax increase for 2013 (2+ / 0-)
        Recommended by:
        johnny wurster, Balto

        raising the top marginal rate from 35% to 40% and the long term capital gains rate from 15% to 24%.  In terms of effective rates we are now approaching the levels before the Tax Reform Act of 1986 where top marginal rates were much higher (up to 91%) but effective rates (because of the widespread use of legal tax shelters) were in the 40-45% range for the top 1%. The top 1% currently pay about 40% of all federal income taxes, double what they paid in 1980. It's true that the income gains since 1980 have gone almost entirely to the top 10%, but the top 10% are paying two thirds of the income taxes. The bottom half of wage earners pay no federal income taxes. They do pay into SocSec and Medicare taxes which are a meaningful tax burden, but those taxes provide for direct financial benefits to participants.

        So tax the rich is a good rallying cry.  I don't think it resonates much in Congress, even with most Democrats, for the reasons outlined above.

        "let's talk about that"

        by VClib on Sat Oct 12, 2013 at 08:04:01 AM PDT

        [ Parent ]

    •  I agree on your characterization of revenue (3+ / 0-)
      Recommended by:
      TriangleNC, johnny wurster, kurt


      The carried interest proposal is valuable mainly for its political potency, which gets lost in the complexity of comprehensive tax reform negotiations, but would stand out in the context of mini-bargaining after hostage release.

      Reduction in high frequency trading would be a major attraction of taxing it (over and above the attraction of raising tax revenue).  It might even result in small investors getting better investment results (on which they consequently pay a bit more in tax).

      •  smaller investors really wouldn't get much (1+ / 0-)
        Recommended by:

        of a benefit at all.  we (small investors!) invest over the long haul, and losing a basis point here and there really doesn't mean much, especially if its clawed back if spreads increase as a result.

        like carried interest, its not a bad rallying cry but benefit to individual investors is likely de minimis.

        •  JW, Harm of high frequency trading is greater (0+ / 0-)

          than implied by your comment, in my view, for reasons such as:

          1. The higher volatility created by high frequency trading directly makes it psychologically (and sometimes financially) harder for small investors to make and hold long haul investments in listed companies.

          2. The impact of high frequency trading on management of actually and potentially listed companies is likely to indirectly reduce the profitable investment opportunities available to small investors.

          3. Much of the purpose of the highest speed trading is to 'front run' and eat up all spreads --and more-- before a small investor's trading order gets executed.

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