One day I hope to pay only '13.9% tax'

[Andy9o8 0]

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policial bias much? .... blinders don't become you

Not in this instance. I'm a political scientist by education and continued interest. Sometimes I analyze politics and government from a strictly academic perspective, as if I'm writing a mini-term paper. This is one of those times. One might not agree with my analysis, but my intent was to be neutral.

[normiss 620]

As well as his spell check dictionary.

[lawrocket 3]

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My problem is with a tax code that says I should pay double his tax rate when I make 0.5% of his income.

The issue for me, Dave, is how his income is derived. He isn’t getting wages. What he is doing is investing him money IN OTHERS with the hopes of a return.

The government has long had lower tax rates for capital gains. The reason is simple – it has been a longstanding policy that the government would prefer that people invest their money into opportunities for others. If I have $10 million dollars sitting in the bank, sure, it’s helpful to have that liquidity that can be loaned out to others.

But what if I take some money invest as a limited partner in a machine shop? I’ll get myself a lease signed for a shop, invest a few million in machinery, put another $100k into marketing, hire staff and hire on machinists to operate the machinery. After six months and, say, six million dollars, the shop is ready to open for business. It operates at a loss the first year – another $500k I’ve put into it (wages, marketing, maintenance, etc) - breaks even the second year and turns a slight profit the third year. The fourth year was lights out and I’ve got a $500k payment owed to me as a limited partner under the Agreement.

I’m taxed on that at 15%, meaning I netted $425k from it. But I’m still down $6.075 million. At this rate it will take me another 14 years just to get back to the $6.5 million I put into it. Add the simple interest I could have made off of investing in tax-free treasury notes and the like and it may be 16 or 18 years to make it back.

But let’s assume that prior to this venture, I would be taxed at, say, 35% of the income. I’ve now netted $325k instead of $425k. I’m now looking to 19 years to make my money back. Meanwhile, my money has employed ten people who have paid taxes and had other withholdings. I’ve had NOTHING to do with the business except for put in seed money and hope for a return on the investment.

One would think that it would be considered a better thing to put the money into investment (it actually employs people and gets money circulating, adds liquidity, etc) than to sit on it. But for some reason, it is being portrayed as “unfair” that the person who risks millions to employ people (there’s a damned good chance that the $6.5 million could go right down the drain) and create products in commerce is viewed as a bad guy for not paying a “fair share” of taxes.

A few months ago, some Senate candidate or something or another became a bit of a cause célèbre by stating that the wealthy benefit from the roads and infrastructure that are built, and without those they would not be wealthy and thus should be forced to pay it forward. Meanwhile, I view paying employees, buying their healthcare, food, houses and vacation for them in exchange for their work and talents to be paying it forward. That guy who put up $6.5 million for a machine may well decide to just sit on his money.

A person receiving capital gains has put their assets at risk in order to make money. Sure, they should be taxed on that money that is made. But the statements from so many limit the importance of what it is that they do, which is the REASON for the capital gains tax. It spurs investment, employment and production.

It’s not about that. It’s about sticking it to the wealthy. It’s about scooping up MORE for the federal government that already takes in $2-3 TRILLION.

My wife is hotter than your wife.

[rushmc 18]

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As well as his spell check dictionary.

I am the last one to make a call like that

"America will never be destroyed from the outside,
if we falter and lose our freedoms,
it will be because we destroyed ourselves."
Abraham Lincoln

[kelpdiver 2]

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How's this for a DEFENDING this. Go make the same amount of money and you can have the same tax rate.

Actually, that's a bit of a bullshit answer because it's not how much money Romney made, but the way the money was made. Pretty much only people that are already rich can be taxed at that low of a rate since it requires one to already have enough money to live purely off investment income.

No, your answer is bullshit. Shah is lying his ass off, and a few others are quite mistaken in their claims he's paying half their rate. Too many of you have confused your marginal tax rate with your effective tax rate.

Shaq- you'd need to be making an *adjusted* $388k to get to the 35% bracket. Your prior comments indicate you're just at 6 figures, still 3 brackets lower at 25%. And we know you have deductions for your home and your awful state income taxes (NJ is actually a good deal cheaper than CA). Why don't you pull out your 2010 return from last year and check out the tax due line.

http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2012/01/19/BUD91MR4RS.DTL

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By this measure, the effective rate on all tax returns filed in 2009 was 11 percent, according to an analysis by the Tax Foundation of the most recent IRS data available.

The effective tax rate was 12 percent for returns with $100,000 to $200,000 in adjusted gross income and in the single digits for every lower bracket.

"It isn't until the $200,000 to $500,000 bracket that we see an average tax rate of higher than 15 percent," says David Logan, an economist with the Tax Foundation.

Romney's rate is low because the majority of his income is in *long term* capital gains or dividend payments, and then he gave about a third of it to charity (half to LDS, half to ?). This is unlike Gingrich who primarily made W2/1099 income, and then gave 2.6% away to charity.

If people want to talk about the tax policy around investments or charitable giving, great. But let's stop the nonsense around your confusion about tax rates.

[livendive 8]

I understand the concept you're describing, but disagree. For one thing, the investment you're talking about (a machine shop, machinery, shop, etc) ignores a fundamental concept...where you describe it taking 16ish years to recoup money, you're ignoring the ownership aspect. The investors stake in that company did not vaporize when he put money into it. The real estate, improvements, machinery, contracts, IP, etc are simply a less liquid version of the savings account he could have kept that cash in. After 16ish years, he'll have all his money back PLUS the ownership stake in all company assets. Do I have a problem with this? Not at all. Here's my rub. The government has decided that making money is the triggering event on which they'll collect taxes for whatever services they provide. For the most part, it doesn't matter the means by which that money is made. One can collect unemployment, serve in the military, perform abortions, deliver meals to hospice patients, provide investment advice, or take their clothes off at a strip club...all of these are taxed at the same rate. However there are a couple HUGE exceptions to this...if the means is an investment by the wealthy, or the corporation is a church, well those lobbies have enough pull to get special treatment. Should risk be a determining factor? Do tandem instructors and commercial fisherman pay a lower rate? What about chronic gamblers?

I understand that certain segments of our society have successfully lobbied for favorable tax legislation. I disagree that they are deserving of such treatments. If risk, moral "goodness", or impact on the economy should be taken into account, then let's get some deductions for social service providers, loggers, and investment advisors. Or better, we can just say money made is money taxed, good things should be their own reward.

Blues,
Dave

"I AM A PROFESSIONAL EXTREME ATHLETE!"
(drink Mountain Dew)

[diablopilot 2]

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It's not about $$ rather it's about %%%

Don't be obtuse. You can't spend a %.

Raise the percentage and two things will happen. A) people won't invest, they'll sit on it. B) You'll spend the "excess" too and everything will stay the same.

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You're not as good as you think you are. Seriously.

[diablopilot 2]

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How's this for a DEFENDING this. Go make the same amount of money and you can have the same tax rate.

Actually, that's a bit of a bullshit answer because it's not how much money Romney made, but the way the money was made. Pretty much only people that are already rich can be taxed at that low of a rate since it requires one to already have enough money to live purely off investment income.

ONE man contributes 3 mil into the pot and it's not enough for you people. Is he using 3 mil worth of resources?

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You're not as good as you think you are. Seriously.

[rehmwa 2]

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Better be carefull billvon, your are starting to sound like a republican.

Bull - he sounds like a person that understand 'legal' vs 'spin'.

Neither a Dem or Rep advocate falls into that category in this topic.

I understand what you are saying but what was meant by my comment was that republicans feal you should be able to keep more of what you earn and spend how you want and dem's want to distribute what you earn as they want. Bill was defending Romney's income and tax % allowing him to keep what he earned.

then you don't understand what I'm saying:

here's a clarification of my intent

I contend that today's Dems want to distribute what you earn as they want.

I also contend that today's Reps want to distribute what you earn as they want.


I don't think either "official and organized" team has or even cares about what I'd call true "fiscal conservatism" - they are both social agenda driven groups.

I do believe that both teams have splinter/sub groups that feel this way and I wish they'd join forces instead of letting their subjective social agenda nonsense keep sidetracking them.

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Driving is a one dimensional activity - a monkey can do it - being proud of your driving abilities is like being proud of being able to put on pants

[kelpdiver 2]

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The investors stake in that company did not vaporize when he put money into it. The real estate, improvements, machinery, contracts, IP, etc are simply a less liquid version of the savings account he could have kept that cash in. After 16ish years, he'll have all his money back PLUS the ownership stake in all company assets. Do I have a problem with this? Not at all. Here's my rub. The government has decided that making money is the triggering event on which they'll collect taxes for whatever services they provide.

And the reason for this is that the investors' stake is not guaranteed to exist. It may very well vaporize, as you put it. It's because of this risk that the investor expects appropriate returns.

If you invest in a building, that is a real asset with value. Not liquid unless you close shop, but valuable, unless say it gets destroyed in an earthquake/flood/hurricane or the neighborhood goes bad. But for a smaller business, it's more typical to lease, be it office space or a restaurant. The first few years that rent is a big burn on cash until (hopefully) the revenue has grown beyond it. Labor is the other huge cost, and has no residual value. Computers and other IT infrastructure depreciates rapidly, had little value after 3-5 years. (Hence can be deducted on annual taxes)

The innate value of this investment is really based on the brand and the cash flow it generates. And when you look at the failure rate for businesses, it only makes sense to tax when money is drawn out.

[rehmwa 2]

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Or better, we can just say money made is money taxed, good things should be their own reward.

so I'm in a quandary now, I was moving my vote to Pirana, but now I see Nightingale has made an appearance, and now you are making clear statements


Who do I vote for to be the next President now?

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Driving is a one dimensional activity - a monkey can do it - being proud of your driving abilities is like being proud of being able to put on pants

[quade 3]

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ONE man contributes 3 mil into the pot and it's not enough for you people. Is he using 3 mil worth of resources?

Oh? Is that the standard you want; a complete "user pays" society rather than shared responsibility?

Are you sure?

quade -
The World's Most Boring Skydiver

[marks2065 0]

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ONE man contributes 3 mil into the pot and it's not enough for you people. Is he using 3 mil worth of resources?

Oh? Is that the standard you want; a complete "user pays" society rather than shared responsibility?

Are you sure?

I think what is meant here is that Romney paid 3 mil and the people that are mostly complaining gave nothing or next to nothing. they need to pay for some also.

[quade 3]

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ONE man contributes 3 mil into the pot and it's not enough for you people. Is he using 3 mil worth of resources?

Oh? Is that the standard you want; a complete "user pays" society rather than shared responsibility?

Are you sure?

I think what is meant here is that Romney paid 3 mil and the people that are mostly complaining gave nothing or next to nothing. they need to pay for some also.

Oh, I agree, GE ought to pay more taxes. Last year they not only paid zero, but actually got subsidy money.

quade -
The World's Most Boring Skydiver

[normiss 620]

Thanks. I love that "comparison".

[rehmwa 2]

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Thanks. I love that "comparison".

Cartoon bubble of GE dressed up like a crack addicted welfare mom.....

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Driving is a one dimensional activity - a monkey can do it - being proud of your driving abilities is like being proud of being able to put on pants

[mnealtx 0]

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Mitt Romney made his money through smart business practices?

Coorperate rading is "smart"
well smart for him and his kind but not so good if it was your job that was shipped off to SEA and the guy still got taxed at a lower rate than you even after you lost your job!
HA!

That must be why Obama appointed Jeffrey Zients (who used to work at Bain Capital) to the OMB.

Mike
I love you, Shannon and Jim.
POPS 9708 , SCR 14706

[marks2065 0]

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ONE man contributes 3 mil into the pot and it's not enough for you people. Is he using 3 mil worth of resources?

Oh? Is that the standard you want; a complete "user pays" society rather than shared responsibility?

Are you sure?

I think what is meant here is that Romney paid 3 mil and the people that are mostly complaining gave nothing or next to nothing. they need to pay for some also.

Oh, I agree, GE ought to pay more taxes. Last year they not only paid zero, but actually got subsidy money.

no argument here, EVERYBODY needs to pay something.

[marks2065 0]

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ONE man contributes 3 mil into the pot and it's not enough for you people. Is he using 3 mil worth of resources?

Oh? Is that the standard you want; a complete "user pays" society rather than shared responsibility?

Are you sure?

I think what is meant here is that Romney paid 3 mil and the people that are mostly complaining gave nothing or next to nothing. they need to pay for some also.

Oh, I agree, GE ought to pay more taxes. Last year they not only paid zero, but actually got subsidy money.

no argument here, EVERYBODY needs to pay something.

[mnealtx 0]

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ONE man contributes 3 mil into the pot and it's not enough for you people. Is he using 3 mil worth of resources?

Oh? Is that the standard you want; a complete "user pays" society rather than shared responsibility?

Are you sure?

I think what is meant here is that Romney paid 3 mil and the people that are mostly complaining gave nothing or next to nothing. they need to pay for some also.

Oh, I agree, GE ought to pay more taxes. Last year they not only paid zero, but actually got subsidy money.

It's good to be an Obama Czar.

And how *dare* GE be able to take offsets against taxes like any other business.outrage>

Mike
I love you, Shannon and Jim.
POPS 9708 , SCR 14706

[SkyDekker 1,120]

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Oh, I agree, GE ought to pay more taxes. Last year they not only paid zero, but actually got subsidy money.

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It's good to be an Obama Czar.

And how *dare* GE be able to take offsets against taxes like any other business.

Does that mean that dividend paid by GE should be taxed at full income tax rate? After all, the money hasn't been taxed yet.

[funjumper101 15]

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The growing jealousy over successful people seriously disgusts me.
I strive to succeed on my own merits.
I don't hate others for tremendous success.
I tend to admire a large portion of them.

Income is what working people make.
Investments are what successful make.
These two are not the same and therefore are generally taxed quite different.
Complain about IRS rules if you will, not those that play by the rules.

Those may be the rules. They are wrong. Totally wrong.

It makes no sense that HOW the money is made has an effect on the tax rate applied. All income should be taxed at the same percentage rate, no matter HOW the money was made.

If there is going to be a difference, money made by one's LABOR or employment, should be taxed at a LESSER rate than money made by investments/tax fiddling/diddling. The system is broken and backwards. It was put into place by the moneyed people, for the benefit of the moneyed people. Regular working folks should NOT pay a higher rate, in terms of percentage of income, than the moneyed people. Note that the term "percentage of uincome" is used. For RWCs, this concept will require some research.

There are those that believe that investment income is "special" and deserves to be treated as superior to, and subject to less taxes than money made by labor.

How can anyone with an IQ over 50 ever justify the concept that money earned by this method or that method should be taxed at different rates? Income is income. Tax it all at the same rates. One kind of income is not superior or inferior to another. It is ALL income, and should be taxed at the same rate.

Isn't there supposed to be a level playing field? All citizens are equal. But some are more equal than others...

[billvon 2,379]

>How can anyone with an IQ over 50 ever justify the concept that money earned by this
>method or that method should be taxed at different rates? Income is income.

So you'd support a (say) 25% flat tax rate for every one?

[kelpdiver 2]

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How can anyone with an IQ over 50 ever justify the concept that money earned by this method or that method should be taxed at different rates?

well, if you're going to ask the question that way, don't expect an answer. It might take an IQ over 100 to understand it, btw.

[rehmwa 2]

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If there is going to be a difference, money made by one's LABOR or employment, should be taxed at a LESSER rate
.
.
.
.
. Tax it all at the same rates. One kind of income is not superior or inferior to another. It is ALL income, and should be taxed at the same rate....

So which is it for you?

I agree with your second comment.

I consider your first just as wrong as the current situation for the same reasons. In other words, the concept of "if there's going to be favoritism applied then I want it done to MY PERSONAL biases" is just more of the same ol' same ol' crap that caused the mess.


"if there's going to be favoritism" STOP RIGHT THERE we already lost

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Driving is a one dimensional activity - a monkey can do it - being proud of your driving abilities is like being proud of being able to put on pants