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View Diary: Glenn Hubbard - Corporate Whore for Corporate Welfare Queens (53 comments)

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  •  Which is unearned income (4+ / 0-)

    and is taxed at a lower rate than wages.  

    "I don't want to run the empire, I want to bring it down!" ~ Dr. Cornel West "It was a really naked declaration of imperialism." ~ Jeremy Scahill on Obama's speech to the UN

    by gulfgal98 on Fri Jan 10, 2014 at 08:48:18 AM PST

    [ Parent ]

    •  no; when it passes through it's taxed (3+ / 0-)
      Recommended by:
      nextstep, Betty Pinson, VClib

      as ordinary income at top marginal rate.

      •  clever accountants likely show it as cap gains (2+ / 0-)
        Recommended by:
        Betty Pinson, lostinamerica

        or some other preferentially treated sort of income taxed at a lower rate.

        i'm part of the 99% - america's largest minority

        by joe shikspack on Fri Jan 10, 2014 at 09:49:26 AM PST

        [ Parent ]

        •  Nope. (1+ / 0-)
          Recommended by:
          VClib

          No amount of cleverness can do that.

          •  Help us all to understand (1+ / 0-)
            Recommended by:
            joe shikspack

            What you are saying here.

            Most profits are distributed to shareholders in the form of dividends.  While some dividends are taxed as normal income, I would guess that most dividends are taxed as qualified dividends.  Otherwise, it appears there would be no advantage to high income CEO's taking the bulk of their compensation in the form of stock.

            At least, that is what I was led to believe in reading (here and elsewhere) about the bulk of income for the wealthiest is unearned income and therefore subject a maximum tax rate of 20%.  

            Since I posted my comment above, I decided to check and see what it was that different.  This and this both seem to confirm what I posted in my previous comment.

            Since you are saying that is wrong, can you enlighten us as to what is it that we are missing?  I think it would be very helpful in this discussion.

            "I don't want to run the empire, I want to bring it down!" ~ Dr. Cornel West "It was a really naked declaration of imperialism." ~ Jeremy Scahill on Obama's speech to the UN

            by gulfgal98 on Fri Jan 10, 2014 at 01:42:24 PM PST

            [ Parent ]

            •  when its a passthrough, the income (1+ / 0-)
              Recommended by:
              VClib

              flows through to the owner (ie, it "passes through").  when it does, it retains its character, because its as if the corporate form doesn't exist.

              the Koch brothers, for example, operate their businesses as s-corps.  the corp itself isn't taxed, but the business income flows through to their personal 1040, retaining its character as business income that is taxed as ordinary income.

              google "s corp" and taxation if you'd like to learn more.

            •  BTW, most execs' income is taxable (1+ / 0-)
              Recommended by:
              VClib

              as wage income.  when they get shares in exchange for their service, its W2 income taxed like any other salary.

            •  gulgal - I am not sure what point you are making (1+ / 0-)
              Recommended by:
              johnny wurster

              but you don't have a fundamental understanding of senior executive compensation. Senior executives earn most of their compensation from equity awards because that is how the compensation committee of the board structures it, not because the executive prefer it. Both the cash compensation and all of the equity compensation including non-qualified stock options and restricted stock are all taxed at the highest marginal rate as earned income.

              All of the equity compensation provided to senior executives of the Fortune 1000 cannot be structured to qualify for long term capital gains treatment. It cannot be done and this is an area in which I am an expert. If it could be done, I would have done it. The very best tax lawyers and accountants in New York, DC and San Francisco are all of one mind on this point.

              "let's talk about that"

              by VClib on Fri Jan 10, 2014 at 09:30:19 PM PST

              [ Parent ]

        •  joe - there is no possible way that equity awards (0+ / 0-)

          to senior executives of the Fortune 1000 can be structured to qualify for long term capital gains treatment. It cannot be done and this is an area in which I am an expert. If it could be done I would have done it. The very best tax lawyers and accountants in New York, DC and San Francisco are all of one mind on this point.

          "let's talk about that"

          by VClib on Fri Jan 10, 2014 at 09:24:40 PM PST

          [ Parent ]

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