All income from businesses is eventually passed through to the owners, so to ignore business taxes creates a statistical illusion that makes it appear that the rich pay less than they really do. By this logic, if the corporate tax rate were raised to, say, 60% from today's 35% and the dividend and capital gains tax were cut to zero, it would appear that business owners were getting away with paying no federal tax at all.But Romney needs to be able to explain this persuasively to the American people. He needs to be able to explain this while his opponents are gleefully screeching "15%!" It's a good test of his ability to be persuasive, as a good candidate must be. So step up and take the test, Mitt!
This all-too-conveniently confuses the incidence of a tax with the burden of a tax. The marginal tax rate on every additional dollar of capital gains and dividend income from corporate profits can reach as high as 44.75% at the federal level (assuming a company pays the 35% top corporate rate), not 15%....
[T]he average effective tax rate on the richest 1% is already twice as high as that of the middle class.
January 20, 2012
Should we be outraged at how little Mitt Romney (like Warren Buffet) pays in taxes?
The Wall Street Journal notes that Romney (like Warren Buffet) makes his money from investments, so the income he receives has already been taxed "at the corporate tax rate of 35%." The 15% tax he pays sounds unfairly low, compared to the tax rate on wages and salaries, but it's not low at all if you see it as a second tax.
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«Oldest ‹Older 201 – 233 of 233a one-time "soak the rich" punishment tax to make up the shortfall.
Instant Zimbabwe will be a hard sell, I think. As 100% confiscation of all the income of the "rich" and a good chunk of the middle class is what you are talking about, since there is no other way to make up a deficit in the trillions.
No. Why should we blame anyone for taking advantage of the tax code as it stands. If anything it's an indictment of how the tax code has helped in train wrecking this economy.
True, except the business tax can be adjusted so easily. I've seen the returns of some very rich people and they easily adjust their numbers to pay a few thousand. It's technically legal usually, but boy do they push it.
Meanwhile a middle income, salaried individual does not have this option. It just isn't there. Their income is too simple. They cannot massage their own numbers. If they do a sole proprietor, they can massage them a little, but lose any security in the form of unemployment, etc.
Scott
Hey, I had to crash, early day for me but I got up to lvl six and plan on hitting it hard tonight. We need to group up at some point for the higher level stuff.
At least Mitt PAYS his taxes. Unlike a great many members of the current Administration.
Mitt estimated he pays 15% because that's the rate for investment income which is taxed at a lower rate than salaried/earned income. Investment income is taxed at a lower rate in order to encourage investment and, like the death tax, it's the government's second bite at the original earned income apple.
I had to hit the sack. I'm 6-7 and will be all caught up by happy hour today!
Need to group up to do the higher level stuff
You form your corporation, and then your corporation sells your services to BP&S for $100. Now, your corporation (if its income is high enough) will pay $35 in taxes; and then when you take the remaining $65 in dividends, you'll pay 15% on that, so you're left with $55.25.
15%??? I'm pretty sure Dose is vehemently opposed to taxing dividends as anything other than ordinary income. So let's say 28%, which leaves him with $46.80. (Hell, according to Dose, we could make it 80% without affecting his incentives.)
Lisa said...
Why aren't wages considered a second tax then? Because those come from businesses income as well. Of course, that pretends that businesses actually pay their fair share of taxes.
It's simple Lisa. Wages are a deductible item for the business and thus the amount paid in wages are not taxed to the corporation.
You need to move beyond ignorance before you render opinions.
"...most corporations that we are talking about (with investors) don't pay 35%. In fact, a large majority pay 0%."
Citation, please.
Specifically, a citation for
"a large majority pay 0%"
that is.
The strength of the Buffett Paradox persists.
Be a connected banker and set up a Hedge Fund, you can pay 15% and under, while your staff accountant and sales reps are taxed at 28%. The rejoinder..."Well...what is stopping you from becoming a connected financier with their own private Belize-based Hedge Fund instead of being a hired accountant?? Your choice!!" That isn't flying too well with the US public
Nor the situation where children of powerful politicians and Democrat donors being given insider positions in Green Energy projects. With the bulk of their compensation in lower taxed options vs. earned income - once Mommy and Daddy push the loans though the Energy Dept and award the necessary permits for the boondoggle.
"Well, what is preventing you from being a powerful politician and rewarding your family members accordingly...your own fault!! You could have been a powerful DC lawyer too with a 4-year White House pass and had similar gravyboat opportunities..but you were not smart enough, were not connected enough, didn't work hard enough to get a such a powerbroker status!" - That too is not what the American public wants to hear.
Revenues goes up when tax rates go down. That's why need to cut the Tax rate to Zero. Revenue will skyrocket!
And there are plenty of Captial investments that don't produce any jobs. If I sell my Rembrandt or my Mansion for a $50 million - I haven't created job one.
MayBee said...
I am certain Barack Obama only pays 15% on his capital gains.
He has no capital gains because he's never invested. He's making $5 million a year on his books (down to about $2 million this year.) Obama has never done (or apparently studied) anything that would teach him about the crucial role of capital in the economy. He will live his entire life, and remain a very wealthy man, without ever understanding this process.
Cedarford. You are correct. What the public does want to hear,however, is that they can get rich themselves without risk and without effort and with minimal education. They would prefer that everyone make 75,000 per year instead of some making 100,000 and some making a million. Because our educational system has done a miserable job most believe that when Soros makes a million it is a million otherwise not available to them Thus it is that freedom is picked without protest from our pockets
Rcocean. When you sell your painting for 50 million (and i hope you do!) the money goes from off the wall where it was doing nothing economically into the bank where it earns interest. The bank lends the money to people who put it to use. Unless you take the fifty and vuy another painting in which case the broker will deposit his fee into the bank,etc.
Where'd you slack off to? I got the new toon to 10 before calling it quits.
Wait!! what are you guys playing?
I let my WoW account lapse for now. Got bored with my level 85 toons
Paco Wové said...
"...most corporations that we are talking about (with investors) don't pay 35%. In fact, a large majority pay 0%."
Most corporations pay little to no tax because they have little to no income. Most people don't understand how many corporations exist and the circumstances they face. It's easy to come up with some statistic that sounds alarming until you understand the mundane circumstances driving it.
Democrats specialize in these scare tactics. So few of their base work in the environment Democrats demonize they can essentially say anything they want and their base willbelieve it. This complaint is coming from someone who read some leftist talking point but lacks the knowledge and experience to understand what it meant. You should be used to this, 51 million people voted for Obama and the vast majority believe only what propoganda they've been spoon fed.
Wait!! what are you guys playing?
ST:TOR HD's too much of a wuss to play on a PVP server, so I rerolled on his. He had just rerolled as well, so we're roughly equivalent. Come play, DBQ!
Marshal nails the "most corporations pay no tax" meme. Most exist with no economic activity at all. I recently dissolved a couple that had not grossed a penny in years and got tired of paying the filing fees and license fees.
There are lots and lots and lots of things not taxed which contribute to the GDP.
Then to get a true picture of how a decrease in the marginal tax rate increases revenue you have to remove those things not taxed but which contribute to the GDP from the equation.
And there are plenty of Captial investments that don't produce any jobs. If I sell my Rembrandt or my Mansion for a $50 million - I haven't created job one.
Yes you do, in a way, kinda. Here's why.
Unless you plan on stuffing a lot of mattresses with the money it's going to get invested, even if you just buy a bunch of Cds and renew them every year. The banks that hold those CDs for you put your 50 million on the plus side of their books. They then us that asset to offset loans to people. People who buy houses, or cars, or finance a business.
So no matter what, your financial wealth creates jobs.
Here is the easiest way to prove that: If your argument were true, an increase of rate would result in the reduction of revenue (which it doesn't).
Um, fail.
What is most comical about this is you authored it about 10 minutes after your there are many factors proclamation.
You can not provide a single instance (note: look at the chart is not an argument) where taxes were cut and revenue declined.
Ever.
If Bain & Co. (believe this is Mitt's old firm that still has him as a passive partner) is a pass-through entity (which I believe it is), then its profits are passed through to Mitt on his personal return, without being subject to a corporate tax of 35% or any other rate. Always nice to inject a little reality in the discussion. You're welcome.
"If Bain & Co. (believe this is Mitt's old firm that still has him as a passive partner) is a pass-through entity (which I believe it is), then its profits are passed through to Mitt on his personal return, without being subject to a corporate tax of 35% or any other rate."
This might be true, but it's irrelevant. His investment company isn't generating the original taxed income, the companies his investment company bought equity in pay the tax.
So the local liberal radio network last night (was it NPR or some college wishful-thinking network?) I heard a guest opine about the diabolical way that the rich get away with "unrealized capital gains" year after year after year.
Let that sink in for awhile. "unrealized capital gains." There is no assuaging the beast of class envy.
of course we can make revenue match outlays, cut spending or do a one-time "soak the rich" punishment tax to make up the shortfall.
The Constitution effectively forbids taxing people based on their wealth. You would need an amendment, same as we did when the income tax was proposed.
Rcocean said this only a few minutes ago:
"And there are plenty of Captial investments that don't produce any jobs. If I sell my Rembrandt or my Mansion for a $50 million - I haven't created job one."
And he has already been de-pantsed by two commenters.
"Let that sink in for awhile. "unrealized capital gains." There is no assuaging the beast of class envy."
Of a piece with the criticism of a consumption tax (which I'm not arguing for here) that the wealthy can avoid the tax by not buying things.
Ummm, OK.
I think it's great that we're having this debate as a country. For too long, the class envy thing has been swept under the rug. No more, we're gonna have at it!
So effing what.
If Mitt complied with all federal and state tax laws, then so effing what?
Show me your animus about Tim Geithner, et. al. before yakking about Romney's tax returns.
Here is the easiest way to prove that: If your argument were true, an increase of rate would result in the reduction of revenue (which it doesn't).
Which it does.
Nixons wage and price controls. Just for an example.
Michael said...
Dose.
What "tools" do traders, traders, use to convert trading profits to long term gains. Be interested in the names of the tols and how they are employed.
1/20/12 12:46 PM
They'll roll it over into long term investment vehicles like bonds. Or in the case of Jimmy Carters double digit inflation and tax increases on investments, profits will seek non taxable shelters or even hard assets.
The goal is to minimize risk. In this case tax risk.
Geez. To accept this bullshit argument you'd have to believe that Romney IS the corporation!
I AM THE FIRM!
The borg will not assimilate the people, you jerks. Go keep the corporate borg confined to the amoral materalists who can't accept human needs, human expression and human politics.
Buh-bye!
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