Why not give equal treatment to wages, dividends, and capital gains for income tax purposes?

[Boojatta]

[PDJane]

1. Because that would mean that the very wealthy

Have to pay their fair share. That's not what it's all about.

[Name removed]

15. Deleted message

Message removed by moderator. Click here to review the message board rules.

[angstlessk]

2. you don't KNOW, by god how dumb can one be?? cause the ultra rich will stop investing

and go to work, silly!!! why invest and sit on your arse and collect dividends and interest when you can work for a living at the same tax rate??? DUH!!!

[thunder rising]

3. collect dividends and interest... on what you inherited!!

[angstlessk]

5. yes, but we KNOW they would give it all up in an instant if they were over taxed

they envy the hell out of those ditch diggers and wal-mart greeters...get a clue deary, or is that sweetie??

[The Magistrate]

4. They Should Be Treated Equally, Sir

Equal treatment in the case of a capital gain would require some form of indexing, for when an asset is held for a length of time before it is sold, some portion of the increased price may reflect a lessened value of the currency. If you bought something for a hundred dollars in 1950 and sold it for three hundred dollars in 1980, you might not really have made any money at all on the transaction, as dollars were worth much less when you sold than when you bought. The reverse can occur as well. Currencies do sometimes gain in value over time, so that what gain is actually realized may be greater than the simple comparison of purchase price and sale price would indicate, which could even show a nominal loss despite an actual gain in value in extreme cases.

[JFreitas]

9. Hmmmm.....

Thus, by the same rationale, if I make 50,000$ this year, but the dollar goes down next year, say by 20%, I should pay taxes as if I had earned 10,000$ less, maybe go down one income bracket, etc.... I fail to see how this is different. Plus, the fact that the taxes are paid inside the territory, to the same government, using the same currency, makes all taxes to some extent RELATIVE to their own currency. I know this is not exactly so, and some forms of property are highly impacted by currency devaluations... but then again, so is labor, as in fact the relocation of factories and so on to other countries can also be a factor of currencies change.

I think that rationale is just another way to somewhat protect the rich from a specific type of insidious taxation, called inflation, of which currency devaluation is one form, whereas working types have to pay it all.

[The Magistrate]

16. Income Tax Brackets Often Are Indexed, Sir

And in my view it is certainly proper that they should be. An increase in nominal amount that is not an increase in real purchasing power should not subject anyone to an increased tax liability.

[JFreitas]

10. Hmmmm.....

[Boojatta]

6. Kick to elicit more comments

[gravity]

7. I think having a lower rate for long term investments is good

It rewards people who invest in this country for the long term, instead of the traders who flip stocks on Wall Street. If you want a compromise, then you could make the long term rate a progressive system so the super rich would pay a higher rate, but I still like the idea being lower than wages.

In the short term (less than a year) capital gains are taxed like normal income, so that isn't a problem.

I disagree with the taxes on dividends. The problem is that the money that the profits that go out to shareholders have already been taxed by the government, so it is essentially a double taxation. If a company makes X amount of profits after taxes, they should be able to give it out to shareholders without extra taxation.

I don't think that treating all the forms of income the same for tax purposes is the best way to go about it. We should focus on having a fair progressive system where the rich have higher rates, but not raise taxes on those in the middle class who investing for their retirement or child's education.

[Boojatta]

8. When banks receive interest payments from people who have mortgages,

do they pay no taxes on that money but simply subtract their administrative costs and pay all the remaining money to people who have bank accounts? Alternatively, is there some other reason that if interest income is received in a bank account owned by an ordinary student, employee, or retiree, then the taxation of that income shouldn't be considered to be essentially a double taxation?

I disagree with the taxes on dividends. The problem is that the money that the profits that go out to shareholders have already been taxed by the government, so it is essentially a double taxation.

[gravity]

12. I don't know the details to be honest, but...

One distinction with a bank is that you really don't own the bank when you provide them capital. Banks will provide you a fee for the service you provide them although you don't really share into the profits, so it could not be considered double taxation.

A credit union could be differently since share ownership of the institution when you open the account so it would be considered double taxation.

I am not a tax lawyer, so I don't know all the details behind this or even if I am accurate on it. Figuring out the taxes in different situations can become messy.

But I really don't like much of the taxes on interest gains either, with a possible exception for those in the highest income brackets. We should reward those who are saving money instead of running into debt. Inflation is already eating out these modest gains, and we shouldn't have to punish them more.

[Boojatta]

13. deleted by Boojatta

[Boojatta]

14. "you really don't own the bank when you provide them capital"

I suspect that someone who owns a million dollars worth of Microsoft common shares has a very small fraction of the total market capitalization of Microsoft and even less influence over Microsoft management decisions. Of course, Microsoft isn't a bank, but the notion of ownership that you are putting forward sounds like a legal fiction.

[Karl_Bonner_1982]

11. I say go even further and cut wage taxes

If we are going to have a truly fair tax system it should tax unearned income at a much higher rate than earned income. This would mean cutting payroll taxes on the working class while increasing capital gains, inheritance, and luxury sales taxes.