Romney says it's "fair" that he only pays 14 percent taxes and you pay more

[kpete]

Romney says it's "fair" that he only pays 14 percent taxes and you pay more
By John Aravosis on 9/23/2012 08:34:00 PM

Romney on 60 Minutes tonight:

(PELLEY) Now you made, on your investments, personally, about $20 million last year. And you paid 14% in federal taxes. That's the capital gains rate. Is that fair to the guy who makes $50,000 and paid a higher rate than you did?

(ROMNEY) It is a low rate. And one of the reasons why the capital gains tax rate is lower is because capital has already been taxed once at the corporate level, as high as 35%.

( PELLEY) So you think it is fair.

(ROMNEY) Yeah, I-- I think it's the right way to encourage economic growth-- to get people to invest, to start businesses, to put people to work.

http://www.americablog.com/2012/09/romney-says-its-fair-that-he-only-pays.html

[tjdee]

1. What do they mean, "taxed at the corporate level"?

Cause that sounds like bull to me.

[DURHAM D]

6. I am with you - I have no clue what that means.

[cojoel]

13. Mitt is confused

A common Republican argument to why "Dividends" are taxed at a lower rate is because they are the result of corporate profits, which were taxed. The argument was always a canard as you could say the same thing about the money you paid the grocery store; it was taxed at the personal level so the store shouldn't have to pay tax on it. It is more a canard now that most corporations have exempted themselves from taxation.

Capital Gains are certainly not taxed the corporate level.

[True Earthling]

17. Money invested as capital was already taxed...

In the case of corporations it was taxed at the corporate rate and individuals at the individual rate. An argument for a low capital gains rate is that it represents double taxation.

[Honeycombe8]

19. Wasn't the $ in my paycheck from my employer taxed as profit or income for my employer?

And then maybe deducted as an expense (my salary)? And then taxed again as my income?

Capital gains is profit paid to an owner (shareholder). So the capital gains was taxed as income at the corporate rate, and then is taxed again as individual's income? But that is proper to do, since it is merely a payment of the profit...and it does indeed become income for the person (whether by labor or investment).

I wonder if the profit paid to the owner (the capital gains distribution) was counted as an expense by the corporation, coming out of the profits, once paid as a dividend?

Too complicated for me!

[True Earthling]

20. The money in your paycheck is an expense to a business... it reduces the profit.

There are two types of corporations... the C corporation is how public listed companies are structured and they pay taxes at the corporate rate... the owners/shareholders are treated separately and owe no tax on the corporate earnings.

S corporations are your small, family owned businesses. In an S corp, the profits flow through to the owners/shareholders and they pay personal taxes on their share of corporate profits in proportion to their ownership.

The after tax earnings/profit of a corporation can be distributed to the owner(s) in the form of a dividend. The dividend is taxable if the corporation is a C corp. If an S corp, the dividend is tax free since the profits were already taxed at the personal rate. However in an S corp the dividends reduce the retained earnings and lower the cost basis of the shares owned which results in a higher capital gain if the business is sold.

[HiPointDem]

28. as an expense, it also reduces the corporation's taxable income, i think. i don't see how

employee wages reduce 'profits' as profits are what remain after paying expenses, including employees' wages.

[True Earthling]

30. Yes, employee wages reduce taxable income..taxable income = profits.

[HiPointDem]

31. i think profits are what's left after taxes. taxable income = taxable income.

[True Earthling]

32. Businesses look at profits in a number of ways...

there's net profit before tax and net profit after tax.

Taxable income is net profit before tax.

The term "profit" by itself is nebulous.

Wages as an expense reduces taxable income thus reduces taxes....although taxes are reduced, net income after tax is also reduced because for every $1 increase in salary expense only reduces taxes by $.25 when using a corporate tax rate of 25% as an example.

http://goo.gl/2ZfKz

[Honeycombe8]

33. But it was FIRST counted as income, from which expenses were deducted.

All money floats around being taxed repeatedly.

Before it was paid to my company, it was taxed as income by another person. Maybe it was capital gains income, which means it was taxed as corporate income before then. And so on.

[True Earthling]

35. Not first.. simultaneously.

Cash generated through sales is considered revenue. Expenses are deducted simultaneously from revenue i.e. cost of goods, interest expense, advertising, wages etc. to calculate net income before taxes. From there taxes are deducted and the result is net income after taxes.

[Honeycombe8]

36. Earthling, won't you let me win ONE point? Give me a break!

I'm struggling here. Cut a non-Earthling some slack!

[True Earthling]

37. Sorry.. look at it this way

All money floats around being taxed repeatedly.

It's not the money that's taxed... it's the possessor of the money that's taxed. Money is just a tool (or a lubricant) to facilitate the exchange of goods and services.

Everyone is born with assets that can be converted to money... a mind that can generate ideas and/or the ability to perform tasks requiring various levels of skill that are wanted/needed by others. How well one develops and applies these assets will largely determine how much or how efficiently these attributes can be converted.

Money is a tool much like a ruler...think of money as a unit of measure like an inch. One has to get their mind straight that money isn't wealth... it's a symbol that combined with numbers becomes a measure of wealth. It's an abstract concept that depends on the the collective mind to give it meaning or life.

The amount (measure) of money that one possesses fluctuates over time depending on how much money their personal assets can generate minus that which is converted to food, clothing, medical care, housing, transportation etc. ... and tax payments. So you can take a snapshot of one's assets that are denominated in dolllars/money and pinpoint the source of money coming in and pinpoint the destination of money going out but it's pointless to say money from a specific source went to a specific destination.

When money "floats" from one entity to another in a transaction i.e. wages for work done, or the sale of an asset, money as an abstract concept has no history..no past. It only exists symbolically in the present and represents the value of the goods or services on the other side of the transaction.

[Honeycombe8]

40. Okay. I totally understood that!

I get it. Well, I get it if it means that it doesn't matter that someone's capital gains income was just taxed as income of the corporation.

The money I receive as income...has no history, really, as it relates to ME. I am getting income, therefore I am taxed on it.

You should write technical manuals.

[True Earthling]

45. The difference between income tax and capital gains tax...

I get it. Well, I get it if it means that it doesn't matter that someone's capital gains income was just taxed as income of the corporation.

Income Tax.
Most people think income is taxed. Income is a formula composed of revenue and expenses so the proper perspective is to look at it as the economic activity of the entity that generated the income is taxed. Businesses require the support of public/tax funded resources, infrastructure and a system of law and government to facilitate and protect their operations...roads & highways, law enforcement, courts, military, etc. Each business operation is burden on these systems. It's impossible to determine exactly how much of public resources each business uses so a formula was devised that extracts an income tax based on the success of the business operation. As far as fairness, the fairest way to tax would be a tax based on how much each business utilizes each aspect of public infrastructure and resources... but that would be impracticable.


Capital Gains Tax.
Capital Gains is passive income generated by the transfer of ownership of an asset from one entity to another at a higher value. When an asset such as gold is purchased, there is minimal utilization of public infrastructure and resources required during the term of ownership or by the transfer of ownership.. The value fluctuates according to how scarce or plentiful the asset is at any given moment or what the collective mind perceives the value to be in the future. Investments such as shares of stock in a business are considered an asset because is constitutes ownership. The stock ownership is a claim on the current value and future profits of a business and of itself generates no economic activity. So capital gains tax is more like a federal sales tax.

An argument I hear on DU is that capital gains should be taxed at a higher rate... as high as the personal rate. The justification I hear is that owners/investors did nothing to deserve the gain. I think this is a dangerous slippery slope...It's basing the tax rate on a judgement of what a person or entity "deserves" instead of basing it on the economic effect of the activity itself.

If the capital gains rate were to be raised some argue it would make investments less attractive because future gains would be offset in proportion to the tax. They argue that this would depress stock prices which would result in less money available for companies to expand and hire. Some argue that it would have no effect except to raise more revenue.

IMO, the tax rate should be tied directly to the public resources required to support the economic activity like a tax on a toll road to pay for the road maintenance or a high cigarette tax to compensate for the high health costs of smoking.

[Honeycombe8]

46. I agree with that. I do think that raising the CG rate would have SOME effect on the market.

I'm not sure how much, and it might depend on how much the CG rate was raised. But I think the market was very healthy in earlier days when the CG rate was higher.

[Angry Dragon]

2. How many jobs did you create last year Willard??

and do not say your campaign created x amount because that is other peoples' money

[Cali_Democrat]

4. Great question

[central scrutinizer]

26. the jobs were in the Caymans

not the US. Bishop Willard does not put his money where his big fat mouth is.

[spanone]

3. he not only thinks it's fair, he wants to LOWER that rate.....

[reformist2]

5. Mitt thinks his rate should be 0%, because "it was already taxed at the corporate level."

This man is just digging himself deeper and deeper....

[former-republican]

7. capital gains is a tricky one

You want people to risk capital .
Worst thing that could happen is millionaires sit on their money.

[Angry Dragon]

8. They are sitting on their money

if they were not there would be all kinds of start-ups
investing in stocks is sitting on your money

[former-republican]

9. not always

Sometimes when there is a new stock offering it is to expand a company .

[Angry Dragon]

11. How many stock offerings in 2011??

[former-republican]

14. I don't know

I'm sure there's a source that has information on companies going public in 2011 .

I don't really keep up on that . I'm just a blue collar worker.

[Angry Dragon]

23. 153 in 2010

[SickOfTheOnePct]

10. No, investing in stocks is not sitting on your money

In most cases, it provides working capital for businesses.

[Angry Dragon]

12. Yes, if it is a new stock offering

[SickOfTheOnePct]

15. No, not just if it's a new stock offering n/t

[Angry Dragon]

21. If I go into the stock market and buy stocks

it does not put any more money into those companies
the broker makes money, the seller may or may not make money
the money just swirls around and produces nothing

Please tell me how this puts money into a company, I do not see it??

[Art_from_Ark]

34. In most cases, buying stocks is just transferring ownership of existing stocks

Unless you buy stock from a company that has just issued new stock, you are merely taking ownership from someone else and are not providing new working capital to the company.

[mythology]

16. Why does it matter if milllionaires sit on their money?

We've spent the last 40 years doing things to shovel money to millionaires. Lowered income tax rates, lowering the capital gains tax, corporate and personal tax loopholes etc. It hasn't gotten us anything positive.

The idea that millionaires are the ones driving the economy should be dead and buried.

[former-republican]

18. well I know when the company I work for

wanted capital to expand they offered 500 million in bonds.
If I remember right it was only offered in blocks of 10 ($100,000 each)

I remember us guys joking in the warehouse that we could pass a hat around and buy a block of bonds.
Meaning that guys like me and maybe you? We don't have a that kind of money.

But you need people who do to buy them and take the risk in doing it.. The company did expand and we hired a lot of new workers.
This was more than a few years ago before everything went to hell in the economy.

It wasn't stocks but it is kind of the same..

[Angry Dragon]

22. Wouldn't it be nice if you and the workers could do it though??

Why should the rich be the only ones that have that option??

[former-republican]

27. sure it would...but

I try not to dwell on things I know I can't have.
If I do it doesn't help me.
In a perfect world

There shouldn't be any homeless persons in this country. We are the richest in the world.
People shouldn't have to worry about paying next months rent or being able to buy new school clothes for their kids.

Or being 3 checks away from being homeless but that's the reality .

I know I don't trust the government in spending our money wisely anymore.
The best thing you can do for yourself and family is live an honest life , take care of your kids .

As much as I would like to see this country and world change. One thing I know for sure.
The game is rigged and people like me just will plug along best as we can.

and that's my rant

[Incitatus]

39. If that's what you think do you think who you vote for

Can make a difference. Yes, the game is rigged. Some of is believe that changes can be made if enough of us work together and try

[former-republican]

42. I think to some extent it can

but I have come to the conclusion that allowing 540 people (give or take) and one man determine
always how our country heads will always be a monumental mistake.

Power corrupts even the best intentioned people. When you give control of that much money to a few people.
And I mean the government....They look out for their own best interests not the country as a whole.

To a politician it's always the next election cycle and what they must do to win.
We have billions of dollars being lobbied every single damn day to our elected officials . There will never be an honest government with that type of corruption and money flowing through the backrooms of Washington.

And that goes for both parties not just the republicans...............

[Incitatus]

43. That is a good point, but what is the solution?

1 term limits maybe? I don't see anyway we can realistically make that happen. I do not like many of the things Democrats do, but I see them as the lesser evil. Any other vote is just waste.

[former-republican]

44. Voting is always the lesser of two evils

Democrats as a whole are better for this country .
I don't agree with all the platform and I don't think any registered democrat does either in the country.

Term limits can be a plus or a minus . Got to be careful on that.
Sometimes it can be just as dangerous to have a person knowing no matter what he pushes through.

It won't matter because he can't run again. It's a tough call


I don't know if there is an answer to it. I think a start should be lobbying made illegal.
It creates favors owed .

[Angry Dragon]

24. If they sit on their money it can not be circulating

There is only so much money in the system, if it is not moving it is not doing anything.
You spend your money creating demand, theirs' does not.
Your money moves around. The experts say 6-7 hands. Theirs' one.

[HiPointDem]

29. they already are.

[Incitatus]

38. That would not happen.

What else are they going to do with it? Buy treasury certificates? What happened before the Bush tax cuts or before that when rates were even higher. They are still going to make a lot of money even with higher rates. You are promoting a RW taking point.

Doing no physical labor is their benefit most of these people have financial advisors that make their decisions anyway according to Romney his money is in a blind trust and he has nothing to do with the decisions

Then you have all the CEOs that make most of their income from stocks from the company they run

[upi402]

25. kick, rec n/t

[rustydog]

41. MSNBC reported he actually owed 9% but did not take deducitons to be above the 13%

Mitt claimed he paid...