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08/23/2012 05:25:43 PM · #251 |
Originally posted by Venser:
Originally posted by RayEthier:
Different country and different tax laws ... so I will not hold you to eating your shorts, but I would bet I far exceed the percentage you allude to. :O)
Ray |
In Canada we have higher personal income tax and much lower corporate taxes. So you're probably correct in that assumption. |
I have no doubts about that and would wager that last year I probably paid 10 times in taxes what I made in salary in 1966.
Ray |
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08/23/2012 05:28:55 PM · #252 |
Originally posted by scalvert:
Originally posted by DrAchoo:
Nobody found their old tax returns? |
I doubt anyone bothered to look. The higher rates paid by Obama and Gingrich already disprove your premise (as if it weren't already common knowledge that capital gains are taxed at rates below earned income). |
They only prove the rich might pay more than the uber-rich. Since you and I don't qualify as either it does matter. I hear lots of bitching and moaning about the rich not paying their fair share, but I bet dollars to doughnuts the vast majority of people (you included) pay less than either Obama or Gingrich (the rich) and possibly even less than Romney (the uber-rich). (You can leave Ray and his socialist country out of this.)
It isn't common knowledge that capital gains are taxed below earned income because lots and lots of people are taxed at a rate of 0%. Didn't we go through this math already? You have a short memory.
Message edited by author 2012-08-23 17:29:29. |
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08/23/2012 05:41:16 PM · #253 |
Originally posted by DrAchoo:
... (You can leave Ray and his socialist country out of this.) |
Say what?
It may come as a shock to you Doc, (and possibly a few other Americans) but Canada is most definitely NOT a socialist country. While we do have some social programs that might meet the parameters normally associated with "Socialism", our is definitely based on "Capitalism"
Ray |
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08/23/2012 05:43:36 PM · #254 |
| I didn't put a smiley, but I figured you'd see the joke in my words (being Canadian myself and all). Didn't you hear? The US is now Socialist as well. That's what people are telling me. |
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08/23/2012 05:46:32 PM · #255 |
Originally posted by DrAchoo:
I didn't put a smiley, but I figured you'd see the joke in my words (being Canadian myself and all). Didn't you hear? The US is now Socialist as well. That's what people are telling me. |
Hehehe... sure you are.
Next thing you'll be telling me is that you will be adopting some of the rules that exist here.
Ray |
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08/23/2012 05:47:23 PM · #256 |
Originally posted by RayEthier:
Originally posted by DrAchoo:
I didn't put a smiley, but I figured you'd see the joke in my words (being Canadian myself and all). Didn't you hear? The US is now Socialist as well. That's what people are telling me. |
Hehehe... sure you are.
Next thing you'll be telling me is that you will be adopting some of the rules that exist here.
Ray |
Really the solution to our problem should be to tax Canadians. That would be well accepted by the American population and you are used to paying taxes anyway. Genius! |
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08/23/2012 05:48:02 PM · #257 |
Originally posted by DrAchoo:
Originally posted by RayEthier:
Originally posted by DrAchoo:
I didn't put a smiley, but I figured you'd see the joke in my words (being Canadian myself and all). Didn't you hear? The US is now Socialist as well. That's what people are telling me. |
Hehehe... sure you are.
Next thing you'll be telling me is that you will be adopting some of the rules that exist here.
Ray |
Really the solution to our problem should be to tax Canadians. That would be well accepted by the American population and you are used to paying taxes anyway. Genius! |
Pls dont frgt the mxcns k thnx. |
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08/23/2012 05:50:55 PM · #258 |
Originally posted by Cory:
Pls dont frgt the mxcns k thnx. |
They are too busy growing the drugs you want legalized... ;P
Ok, under that rule we can exclude BC from being taxed as well.
Message edited by author 2012-08-23 17:51:19. |
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08/23/2012 05:50:56 PM · #259 |
Originally posted by JamesDowning:
Maybe you can help me explain this graph? |
That graph does not demonstrate any economic effect. It's just capital gains rate vs. revenue. The two big spikes were the result of Reagan taxing gains like ordinary income in 1986 and the dot.com bubble leading up to 2001. A chart of the deficit will feature the same two spikes: more capital gains revenue = lower deficit.
Originally posted by JamesDowning:
Lower taxes frees up money, boosts the economy, and subsequently increases revenues. Increased taxation slows the economy - I don't think that's easily disputable. |
It's very easily disputable. The worst economies in U.S. historyĂ¢€“ the Great Depression and this oneĂ¢€“ were marked by relatively low tax rates that favored the wealthy while the "good times" of the 1950s-1960s taxed income the most progressively. Higher top tax rates = higher GDP throughout history (the opposite of Republican claims).
Originally posted by JamesDowning:
I personally like the idea of tax cuts for everyone. |
Why didn't we think of it sooner? Oh, because it doesn't work.
Originally posted by JamesDowning:
Rich people invest their free money, middle class tends to spend it. |
Again, history is against you. The middle class spending money creates demand, and the rich then grow business to meet that demand. If the middle class can't afford to spend, then rich people just sit on their money because you can't sell when people aren't buying. |
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08/23/2012 05:53:18 PM · #260 |
The problem with Shannon and James' argument is that if the graphs overlap in a way that supports your position you point it out. If they do not you just say there is a delayed effect (eg. Bush's tax cuts caused the recession). So many other things are going on in the economy that I doubt the correlation is anything above mild in either direction.
Message edited by author 2012-08-23 17:54:25. |
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08/23/2012 05:55:21 PM · #261 |
Originally posted by DrAchoo:
Ok, under that rule we can exclude BC from being taxed as well. |
LOL! |
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08/23/2012 05:59:21 PM · #262 |
Originally posted by DrAchoo:
It isn't common knowledge that capital gains are taxed below earned income because lots and lots of people are taxed at a rate of 0%. Didn't we go through this math already? |
We did go through this already, and you didn't compare apples to apples then either. Lots of people pay 0% because they don't make enough money to be taxable (particularly the elderly and disabled). Compare two people with similar deductions making $200,000 as a manager or as capital gains. The latter will pay a lower rate, period. |
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08/23/2012 06:03:07 PM · #263 |
Originally posted by DrAchoo:
The problem with Shannon and James' argument is that if the graphs overlap in a way that supports your position you point it out. If they do not you just say there is a delayed effect (eg. Bush's tax cuts caused the recession). So many other things are going on in the economy that I doubt the correlation is anything above mild in either direction. |
How about considering the merit of the points with other evidence rather than discounting the validity of all graphs? |
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08/23/2012 06:41:23 PM · #264 |
Originally posted by scalvert:
Originally posted by DrAchoo:
It isn't common knowledge that capital gains are taxed below earned income because lots and lots of people are taxed at a rate of 0%. Didn't we go through this math already? |
We did go through this already, and you didn't compare apples to apples then either. Lots of people pay 0% because they don't make enough money to be taxable (particularly the elderly and disabled). Compare two people with similar deductions making $200,000 as a manager or as capital gains. The latter will pay a lower rate, period. |
False. Entirely depends on the deductions. Unless I am incorrect, you don't deduct your mortgage interest from long term capital gains. You don't deduct charitable giving from capital gains. You don't deduct much of anything from capital gains. The 15% is 15%. So the deductions make a big difference with ordinary income, but not with capital gains income.
To make an absurd example. If your deductions were $200,000 (you gave it all away) (and ignoring AMT or other confounders), I believe you would pay $0 if it were ordinary income but $30,000 if it were capital gains.
But why are you using examples of $200,000? Are you concerned about those people making that amount of money? How about we make it $50,000? A much more normal income...
Message edited by author 2012-08-23 18:44:32. |
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08/23/2012 07:27:04 PM · #265 |
Originally posted by DrAchoo:
Originally posted by scalvert:
Compare two people with similar deductions making $200,000 as a manager or as capital gains. The latter will pay a lower rate, period. |
False. Entirely depends on the deductions. |
Forget tax rates. Let's talk literacy rate. :-/ |
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08/23/2012 08:07:08 PM · #266 |
Originally posted by JamesDowning:
You're ignoring my argument. I'm not for punishing anyone. I don't think tax rates should be raised on anyone, especially in this economy, because it simply will not fix our problems. The numbers easily show it. If you can find ANY article that shows me how raising taxes on the rich will balance the budget, I'm all ears! |
Taxes are by nature punitive. We tax cigarettes and alcohol higher because we want to discourage them, we exempt charities from taxes because we want to encourage them. The rest of the economy we tax because we need to support common needs like roads and a military.
As far as raising taxes being always bad let me quote a piece from US news and world report, a slightly conservative publication.
"Those urging lower taxes are right to argue that our economy stagnates if taxes are too high. High taxes discourage investment and risk-taking. But how high is too high? Many economists agree that when tax rates soar above 70 percent, growth suffers. Cutting taxes at this level definitely stimulates growth. However, these same economists also agree that when tax rates dip below 30 percent, further cuts don't boost the economy. Entrepreneurs and investors simply don't respond to an additional incentive. They are already as strongly incented as they can possibly be."
Our tax rates are low, cutting them is like an anorexic girl going on a diet. Sure, she thinks she is fat, but she is starving herself in her quest for her ideal. The 90% top tax rate of the 60's was too high, but the current 15% is way too low to even think of cutting. Of course no one likes to pay tax, but we won't have much of a country left if no one pays them.
The notion of getting rid of all government waste before we think about raising any taxes will ensure we drop from a first world tax model, to a third world tax model. We can't wait for something that can never happen before we begin to address the flaws and discrepancies in our tax codes. |
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08/23/2012 08:18:00 PM · #267 |
Originally posted by scalvert:
Originally posted by DrAchoo:
Originally posted by scalvert:
Compare two people with similar deductions making $200,000 as a manager or as capital gains. The latter will pay a lower rate, period. |
False. Entirely depends on the deductions. |
Forget tax rates. Let's talk literacy rate. :-/ |
Dude. Similar cold mean $4,000 each or $40,000 each. That makes a difference. Geez. The difference comes because the deduction matters for ordinary income but not capital gains income.
It will become clear by doing this mental exercise. Come up with $40,000 in deductions for ordinary income (answer: easy. $20,000 in mortgage interest and $20,000 in charitable giving). Now, come up with $40,000 in capital gains deductions. Much harder because there are very few if any deductions.
Yet a third way of saying it is to imagine the lives are lived the same. They both have the same house with the same mortgage with the same charitable giving, etc but only their source of income is different. Mortgage interest, for example, will matter in one scenario but not in another. Their "deductions" are similar, but the application of them is different.
Message edited by author 2012-08-23 20:21:03. |
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08/23/2012 08:21:15 PM · #268 |
Originally posted by DrAchoo:
EDIT: I'll put my money where my mouth is. It took me 30 seconds to log in to TurboTax and they even calculate it for me. My effective tax rate was 14.35%. I guess I beat Romney, but only barely and I don't come close to Obama and Gingrich. (Interesting. The previous 3 years were 6.86%, 9.25%, 10.73%) |
What do you know... effective rate of 10.04% last year... I should pay more attention to my taxes because that surprised me.
But in all reality, shouldn't we include the social security deduction if we want the whole picture?
Originally posted by scalvert:
Originally posted by JamesDowning:
Maybe you can help me explain this graph? |
That graph does not demonstrate any economic effect. It's just capital gains rate vs. revenue. The two big spikes were the result of Reagan taxing gains like ordinary income in 1986 and the dot.com bubble leading up to 2001. A chart of the deficit will feature the same two spikes: more capital gains revenue = lower deficit. |
Ok, so we are in agreement right? I'm paraphrasing you here: Lowering the capital gains tax rate by Reagan led to increased capital gains revenue. So, the low point in the stepped line results in high points in the curvy line. (here's a link to the chart, so you don't have to go back a page) Also evident is the spike in capital gains tax rates resulting in lower capital gains revenue during Bush Sr.'s term and Clinton's first years.
No argument that more capital gains revenue = lower deficit, that's an easy one. It's the cause and effect between tax RATES and the ensuing (but not instant) gain in tax revenues that I'm trying to convince you of. Read the chart again.
Originally posted by scalvert:
Originally posted by JamesDowning:
Lower taxes frees up money, boosts the economy, and subsequently increases revenues. Increased taxation slows the economy - I don't think that's easily disputable. |
It's very easily disputable. The worst economies in U.S. historyĂ¢€“ the Great Depression and this oneĂ¢€“ were marked by relatively low tax rates that favored the wealthy while the "good times" of the 1950s-1960s taxed income the most progressively. Higher top tax rates = higher GDP throughout history (the opposite of Republican claims). |
So the argument is that higher taxes results in higher GDP growth? Interesting theory. I see the argument that Keynesian economics is the cause, but there are many factors at work here. Globalization, deregulation, cheap energy, and a cold war were also huge factors. As Achoo said, we see what we want to. While I do see where your argument comes from, it's a bit muddy.
Originally posted by scalvert:
Originally posted by JamesDowning:
I personally like the idea of tax cuts for everyone. |
Why didn't we think of it sooner? Oh, because it doesn't work. |
Yeah, that article is fairly written. Not.
Originally posted by scalvert:
Originally posted by JamesDowning:
Rich people invest their free money, middle class tends to spend it. |
Again, history is against you. The middle class spending money creates demand, and the rich then grow business to meet that demand. If the middle class can't afford to spend, then rich people just sit on their money because you can't sell when people aren't buying. |
I am in partial agreement. The middle class needs money to spend. But the economy also needs a climate in which people want to invest capital too. So this seems to be an argument for lower taxes, no?
Message edited by author 2012-08-23 20:26:49. |
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08/23/2012 08:23:07 PM · #269 |
Originally posted by scalvert:
Originally posted by DrAchoo:
The problem with Shannon and James' argument is that if the graphs overlap in a way that supports your position you point it out. If they do not you just say there is a delayed effect (eg. Bush's tax cuts caused the recession). So many other things are going on in the economy that I doubt the correlation is anything above mild in either direction. |
How about considering the merit of the points with other evidence rather than discounting the validity of all graphs? |
Fine. My beef is that even the smart people talk about the economy like it is a one or two knob machine. The reality, in my mind, is it has a dozen knobs and each may change its effect depending on the position of the other knobs. |
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08/23/2012 08:25:02 PM · #270 |
Originally posted by JamesDowning:
Originally posted by DrAchoo:
EDIT: I'll put my money where my mouth is. It took me 30 seconds to log in to TurboTax and they even calculate it for me. My effective tax rate was 14.35%. I guess I beat Romney, but only barely and I don't come close to Obama and Gingrich. (Interesting. The previous 3 years were 6.86%, 9.25%, 10.73%) |
What do you know... effective rate of 10.04% last year... I should pay more attention to my taxes because that surprised me. |
Hey! What do you know. I'm sure it's similar for everybody else, but I doubt they'll check... |
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08/23/2012 08:33:54 PM · #271 |
Originally posted by JamesDowning:
The middle class needs money to spend. But the economy also needs a climate in which people want to invest capital too. So this seems to be an argument for lower taxes, no? |
NO. When the Federal Funds rate cost of borrowing is 0.25% as it is today, you no longer can lower rates. If it was 18.25% it would be a good option to stimulate the economy, but it isn't. When Tax rates were above 70%, then sure cutting would create a more favorable environment for investment, but when rates are at historic lows, cutting further will not help.
When you are trying to get up a muddy hill, and the gas pedal is all mashed to the floor, pushing harder will not help. Ease up on the gas, slow the wheels until you get traction, then use the gas. Cars come with brakes and accelerators, and you need to use the right one at the right time: equally true of an economy. |
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08/23/2012 09:18:36 PM · #272 |
Originally posted by scalvert:
Forget tax rates. Let's talk literacy rate. :-/ |
Let me take one more crack at this because I think I see where the disconnect is.
If we have a theoretical man who writes on his taxes $200,000 in ordinary income, $40,000 in deductions, and pays taxes on the remaining $160,000 and compare him to another man who writes on his taxes $200,000 in long term capital gains, $40,000 in deductions on those capital gains, and pays taxes on the remaining $160,000 then, yes, the ordinary income man will pay more taxes (although it will only be a few % more).
I don't think that is the best way to look at things.
Better to think of a thousand actual tax payers who write $200,000 in ordinary income on their taxes. Then you look at their actual deductions based on all the deductions and "loopholes" available to them and their actual resulting tax bill. You compare this with a thousand actual tax payers who write $200,000 in long term capital gains income on their taxes. You look at their actual deductions based on all the deductions and "loopholes" available to them and their actual resulting tax bill. It is far from assured in my mind that the first group will wind up paying more tax than the second because while they have an ostensibly higher tax rate they also have far more deductions and "loopholes" to take advantage of.
Does that make sense? |
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08/23/2012 10:20:55 PM · #273 |
| Federal 20.1%, State 7.2% for a 27% cumulative rate, not counting sales tax. |
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08/23/2012 11:11:54 PM · #274 |
Originally posted by Melethia:
Federal 20.1%, State 7.2% for a 27% cumulative rate, not counting sales tax. |
That sounds like you grabbed rates straight from your paycheck and included social security? |
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08/24/2012 12:35:15 AM · #275 |
Originally posted by JamesDowning:
Originally posted by Melethia:
Federal 20.1%, State 7.2% for a 27% cumulative rate, not counting sales tax. |
That sounds like you grabbed rates straight from your paycheck and included social security? |
No, not at all. I did not include social security, and "grabbed the figures" directly from my tax statement for the 2010 tax year. If you'd like, I'll do the same for 2011. These are the percentages I paid in taxes, after deductions. Edit to add that I obviously need help finding loopholes.
Message edited by author 2012-08-24 00:39:25. |
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