Taxes!

[an]

[quote=swave]Obviously, there would be other rates between these extremes. Perhaps 1% at 40 years, 2% at 30 years, 5% at 10 years, 10% at 5 years, 20% at 1 year, 30% at 6 months, 50% at 1 month and 70% at 1 week.[/quote]
Isn’t the current tax rate doing something similar? Currently if you hold a stock for at least a year, your cap gain tax is 15% (if your ordinary income tax rate is 25% or higher) and 0% (if your ordinary income tax rate is <25%). If you sell before 1 year, then it's being taxed at ordinary income rate. So, although currently, it doesn't punish those selling before 6 months as much as your plan. However, your plan punish those who sell between 1-5 years more than the current tax rate. This is also if you're in the 25% tax rate or higher. If you're in 10% or 15% tax bracket, your long term cap gain is already 0%. So, under your plan, those in the 10% and 15% tax bracket would be punished much more than the current tax rate.

[CA renter]

[quote=Eugene][quote]IMHO, we need to discourage gambling and encourage work. That’s why I would lower the rate on **earned** income, and tax investment income at a much higher rate, with steeply progressive rates.

I would not support a consumption tax, because it’s too regressive. Most poor people spend almost all of their income on basic necessities, while the rich can invest theirs. It would be totally immoral and unethical to tax gamblers at 0-15%, while taxing poor people at the maximum rate (if consumption tax is the highest tax).[/quote]

Agreed. VAT only makes sense if you exempt basic necessities, or compensate with a generous tax refund (say, 10% for every dollar earned up to median household income).

Instead I’d suggest that we eliminate mortgage tax deduction, tax all capital gains as income, raise the estate tax to 50% on every dollar above $500,000, close all loopholes and subsidies in corporate tax code, and lower income tax brackets to make the system revenue-neutral.

[quote]We should encourage saving, so people can make intelligent decisions about investment in the future. [/quote]

I’m not so sure that we should encourage saving. Sometimes too much private saving is a bad thing. (Like right now, for example.) And we certainly shouldn’t do it by lowering taxes on capital gains. All it does is inflate P/E ratios of the stock market, with no tangible benefits for the overall economy.

But we should encourage labor vs. passive investment. It would make sense for the top income tax rate to be equal or lower than the capital gains rate.[/quote]

Agreed.

The only thing I disagree with is the inheritance tax. IMHO, that is double taxation, and as a property rights advocate, I don’t like the idea of taxing property (am technically opposed to property tax). Income that has already been earned and taxed should not be taxed again when it’s kept in the family.

Contrary to popular belief, the act of inheriting property or an estate does NOT concentrate wealth; it dilutes it. In the vast majority of cases, when a wealthy person dies, his/her estate is divided up among a number of heirs and beneficiaries — who tend to spend it right back into the economy.

What concentrates wealth are low taxes on passive income. The power of compounded returns on investments is greater than most people understand. IMHO, low taxes on passive income is the #1 reason for the growing wealth divide.

I’d also like to see us distinguish between real investing vs. speculating. SK in CV nailed it when he mentioned that “investing” (as we tend to define it) does not necessarily benefit society or increase productive capacity.

IMO, real investing requires direct investments in things that increase or improve productive capacity, improve infrastructure, etc.

Buying something that already exists (competing with legitimate, organic buyers) in the hope of extracting rents from organic demand, or of getting a higher price for it later, is speculating or gambling. It does nothing to benefit society or increase productivity. This sort of “investing” should be taxed at very high rates, even from the first dollar earned. It creates a dangerous wealth gap, causes market disruptions and paves the way for a damaging boom/bust economy, which benefits the gamblers at the expense of everyone else.

[CA renter]

[quote=Eugene][quote]IMHO, we need to discourage gambling and encourage work. That’s why I would lower the rate on **earned** income, and tax investment income at a much higher rate, with steeply progressive rates.

I would not support a consumption tax, because it’s too regressive. Most poor people spend almost all of their income on basic necessities, while the rich can invest theirs. It would be totally immoral and unethical to tax gamblers at 0-15%, while taxing poor people at the maximum rate (if consumption tax is the highest tax).[/quote]

Agreed. VAT only makes sense if you exempt basic necessities, or compensate with a generous tax refund (say, 10% for every dollar earned up to median household income).

Instead I’d suggest that we eliminate mortgage tax deduction, tax all capital gains as income, raise the estate tax to 50% on every dollar above $500,000, close all loopholes and subsidies in corporate tax code, and lower income tax brackets to make the system revenue-neutral.

[quote]We should encourage saving, so people can make intelligent decisions about investment in the future. [/quote]

I’m not so sure that we should encourage saving. Sometimes too much private saving is a bad thing. (Like right now, for example.) And we certainly shouldn’t do it by lowering taxes on capital gains. All it does is inflate P/E ratios of the stock market, with no tangible benefits for the overall economy.

But we should encourage labor vs. passive investment. It would make sense for the top income tax rate to be equal or lower than the capital gains rate.[/quote]

Agreed.

The only thing I disagree with is the inheritance tax. IMHO, that is double taxation, and as a property rights advocate, I don’t like the idea of taxing property (am technically opposed to property tax). Income that has already been earned and taxed should not be taxed again when it’s kept in the family.

Contrary to popular belief, the act of inheriting property or an estate does NOT concentrate wealth; it dilutes it. In the vast majority of cases, when a wealthy person dies, his/her estate is divided up among a number of heirs and beneficiaries — who tend to spend it right back into the economy.

What concentrates wealth are low taxes on passive income. The power of compounded returns on investments is greater than most people understand. IMHO, low taxes on passive income is the #1 reason for the growing wealth divide.

I’d also like to see us distinguish between real investing vs. speculating. SK in CV nailed it when he mentioned that “investing” (as we tend to define it) does not necessarily benefit society or increase productive capacity.

IMO, real investing requires direct investments in things that increase or improve productive capacity, improve infrastructure, etc.

Buying something that already exists (competing with legitimate, organic buyers) in the hope of extracting rents from organic demand, or of getting a higher price for it later, is speculating or gambling. It does nothing to benefit society or increase productivity. This sort of “investing” should be taxed at very high rates, even from the first dollar earned. It creates a dangerous wealth gap, causes market disruptions and paves the way for a damaging boom/bust economy, which benefits the gamblers at the expense of everyone else.

[CA renter]

[quote=Eugene][quote]IMHO, we need to discourage gambling and encourage work. That’s why I would lower the rate on **earned** income, and tax investment income at a much higher rate, with steeply progressive rates.

I would not support a consumption tax, because it’s too regressive. Most poor people spend almost all of their income on basic necessities, while the rich can invest theirs. It would be totally immoral and unethical to tax gamblers at 0-15%, while taxing poor people at the maximum rate (if consumption tax is the highest tax).[/quote]

Agreed. VAT only makes sense if you exempt basic necessities, or compensate with a generous tax refund (say, 10% for every dollar earned up to median household income).

Instead I’d suggest that we eliminate mortgage tax deduction, tax all capital gains as income, raise the estate tax to 50% on every dollar above $500,000, close all loopholes and subsidies in corporate tax code, and lower income tax brackets to make the system revenue-neutral.

[quote]We should encourage saving, so people can make intelligent decisions about investment in the future. [/quote]

I’m not so sure that we should encourage saving. Sometimes too much private saving is a bad thing. (Like right now, for example.) And we certainly shouldn’t do it by lowering taxes on capital gains. All it does is inflate P/E ratios of the stock market, with no tangible benefits for the overall economy.

But we should encourage labor vs. passive investment. It would make sense for the top income tax rate to be equal or lower than the capital gains rate.[/quote]

Agreed.

The only thing I disagree with is the inheritance tax. IMHO, that is double taxation, and as a property rights advocate, I don’t like the idea of taxing property (am technically opposed to property tax). Income that has already been earned and taxed should not be taxed again when it’s kept in the family.

Contrary to popular belief, the act of inheriting property or an estate does NOT concentrate wealth; it dilutes it. In the vast majority of cases, when a wealthy person dies, his/her estate is divided up among a number of heirs and beneficiaries — who tend to spend it right back into the economy.

What concentrates wealth are low taxes on passive income. The power of compounded returns on investments is greater than most people understand. IMHO, low taxes on passive income is the #1 reason for the growing wealth divide.

I’d also like to see us distinguish between real investing vs. speculating. SK in CV nailed it when he mentioned that “investing” (as we tend to define it) does not necessarily benefit society or increase productive capacity.

IMO, real investing requires direct investments in things that increase or improve productive capacity, improve infrastructure, etc.

Buying something that already exists (competing with legitimate, organic buyers) in the hope of extracting rents from organic demand, or of getting a higher price for it later, is speculating or gambling. It does nothing to benefit society or increase productivity. This sort of “investing” should be taxed at very high rates, even from the first dollar earned. It creates a dangerous wealth gap, causes market disruptions and paves the way for a damaging boom/bust economy, which benefits the gamblers at the expense of everyone else.

[CA renter]

[quote=Eugene][quote]IMHO, we need to discourage gambling and encourage work. That’s why I would lower the rate on **earned** income, and tax investment income at a much higher rate, with steeply progressive rates.

I would not support a consumption tax, because it’s too regressive. Most poor people spend almost all of their income on basic necessities, while the rich can invest theirs. It would be totally immoral and unethical to tax gamblers at 0-15%, while taxing poor people at the maximum rate (if consumption tax is the highest tax).[/quote]

Agreed. VAT only makes sense if you exempt basic necessities, or compensate with a generous tax refund (say, 10% for every dollar earned up to median household income).

Instead I’d suggest that we eliminate mortgage tax deduction, tax all capital gains as income, raise the estate tax to 50% on every dollar above $500,000, close all loopholes and subsidies in corporate tax code, and lower income tax brackets to make the system revenue-neutral.

[quote]We should encourage saving, so people can make intelligent decisions about investment in the future. [/quote]

I’m not so sure that we should encourage saving. Sometimes too much private saving is a bad thing. (Like right now, for example.) And we certainly shouldn’t do it by lowering taxes on capital gains. All it does is inflate P/E ratios of the stock market, with no tangible benefits for the overall economy.

But we should encourage labor vs. passive investment. It would make sense for the top income tax rate to be equal or lower than the capital gains rate.[/quote]

Agreed.

The only thing I disagree with is the inheritance tax. IMHO, that is double taxation, and as a property rights advocate, I don’t like the idea of taxing property (am technically opposed to property tax). Income that has already been earned and taxed should not be taxed again when it’s kept in the family.

Contrary to popular belief, the act of inheriting property or an estate does NOT concentrate wealth; it dilutes it. In the vast majority of cases, when a wealthy person dies, his/her estate is divided up among a number of heirs and beneficiaries — who tend to spend it right back into the economy.

What concentrates wealth are low taxes on passive income. The power of compounded returns on investments is greater than most people understand. IMHO, low taxes on passive income is the #1 reason for the growing wealth divide.

I’d also like to see us distinguish between real investing vs. speculating. SK in CV nailed it when he mentioned that “investing” (as we tend to define it) does not necessarily benefit society or increase productive capacity.

IMO, real investing requires direct investments in things that increase or improve productive capacity, improve infrastructure, etc.

Buying something that already exists (competing with legitimate, organic buyers) in the hope of extracting rents from organic demand, or of getting a higher price for it later, is speculating or gambling. It does nothing to benefit society or increase productivity. This sort of “investing” should be taxed at very high rates, even from the first dollar earned. It creates a dangerous wealth gap, causes market disruptions and paves the way for a damaging boom/bust economy, which benefits the gamblers at the expense of everyone else.

[CA renter]

[quote=Eugene][quote]IMHO, we need to discourage gambling and encourage work. That’s why I would lower the rate on **earned** income, and tax investment income at a much higher rate, with steeply progressive rates.

I would not support a consumption tax, because it’s too regressive. Most poor people spend almost all of their income on basic necessities, while the rich can invest theirs. It would be totally immoral and unethical to tax gamblers at 0-15%, while taxing poor people at the maximum rate (if consumption tax is the highest tax).[/quote]

Agreed. VAT only makes sense if you exempt basic necessities, or compensate with a generous tax refund (say, 10% for every dollar earned up to median household income).

Instead I’d suggest that we eliminate mortgage tax deduction, tax all capital gains as income, raise the estate tax to 50% on every dollar above $500,000, close all loopholes and subsidies in corporate tax code, and lower income tax brackets to make the system revenue-neutral.

[quote]We should encourage saving, so people can make intelligent decisions about investment in the future. [/quote]

I’m not so sure that we should encourage saving. Sometimes too much private saving is a bad thing. (Like right now, for example.) And we certainly shouldn’t do it by lowering taxes on capital gains. All it does is inflate P/E ratios of the stock market, with no tangible benefits for the overall economy.

But we should encourage labor vs. passive investment. It would make sense for the top income tax rate to be equal or lower than the capital gains rate.[/quote]

Agreed.

The only thing I disagree with is the inheritance tax. IMHO, that is double taxation, and as a property rights advocate, I don’t like the idea of taxing property (am technically opposed to property tax). Income that has already been earned and taxed should not be taxed again when it’s kept in the family.

Contrary to popular belief, the act of inheriting property or an estate does NOT concentrate wealth; it dilutes it. In the vast majority of cases, when a wealthy person dies, his/her estate is divided up among a number of heirs and beneficiaries — who tend to spend it right back into the economy.

What concentrates wealth are low taxes on passive income. The power of compounded returns on investments is greater than most people understand. IMHO, low taxes on passive income is the #1 reason for the growing wealth divide.

I’d also like to see us distinguish between real investing vs. speculating. SK in CV nailed it when he mentioned that “investing” (as we tend to define it) does not necessarily benefit society or increase productive capacity.

IMO, real investing requires direct investments in things that increase or improve productive capacity, improve infrastructure, etc.

Buying something that already exists (competing with legitimate, organic buyers) in the hope of extracting rents from organic demand, or of getting a higher price for it later, is speculating or gambling. It does nothing to benefit society or increase productivity. This sort of “investing” should be taxed at very high rates, even from the first dollar earned. It creates a dangerous wealth gap, causes market disruptions and paves the way for a damaging boom/bust economy, which benefits the gamblers at the expense of everyone else.

[an]

[quote=CA renter]Let me clarify this a bit. I would tax passive income at around the same rate as earned income up to a certain amount (maybe up to $50K/year). After that, it graduates, and at some point, it would begin to get steeper (perhaps above $200K/yr, but this could be smoothed to avoid extremely high taxes on one-time sales, etc.). Passive income above $500K/yr would be taxed at the highest marginal rate. I’m pulling these levels out of thin air, and would want to do a more detailed analysis before determining the exact rates and income levels, but these numbers are probably pretty close to what I’d call optimal. Of course, I would allow for some smoothing, maybe over three years, so that windfall events don’t trigger the highest rate if most years only see very low returns.[/quote]
So, in essence, you are saying higher cap gain tax for EVERYONE. Those who currently make < $50k/year (those who are in the 10% and 15% tax bracket) are currently paying 0% in long term cap gain and same as their ordinary income for short term cap gain. You're punishing the investor in the 10% & 15% tax bracket, yet don't touch the day traders and the "speculators". You've been railing against "speculator", yet your proposal don't touch those guys but drastically affect those who are investors (those who hold their investments for at least a year). BTW, what's your definition of steep? Also, why stop at $500k? I'd say, we should have a billionaire tax. How about 80% tax on all time of incomes for billionaires? Is that steep enough?

[an]

[quote=CA renter]Let me clarify this a bit. I would tax passive income at around the same rate as earned income up to a certain amount (maybe up to $50K/year). After that, it graduates, and at some point, it would begin to get steeper (perhaps above $200K/yr, but this could be smoothed to avoid extremely high taxes on one-time sales, etc.). Passive income above $500K/yr would be taxed at the highest marginal rate. I’m pulling these levels out of thin air, and would want to do a more detailed analysis before determining the exact rates and income levels, but these numbers are probably pretty close to what I’d call optimal. Of course, I would allow for some smoothing, maybe over three years, so that windfall events don’t trigger the highest rate if most years only see very low returns.[/quote]
So, in essence, you are saying higher cap gain tax for EVERYONE. Those who currently make < $50k/year (those who are in the 10% and 15% tax bracket) are currently paying 0% in long term cap gain and same as their ordinary income for short term cap gain. You're punishing the investor in the 10% & 15% tax bracket, yet don't touch the day traders and the "speculators". You've been railing against "speculator", yet your proposal don't touch those guys but drastically affect those who are investors (those who hold their investments for at least a year). BTW, what's your definition of steep? Also, why stop at $500k? I'd say, we should have a billionaire tax. How about 80% tax on all time of incomes for billionaires? Is that steep enough?

[an]

[quote=CA renter]Let me clarify this a bit. I would tax passive income at around the same rate as earned income up to a certain amount (maybe up to $50K/year). After that, it graduates, and at some point, it would begin to get steeper (perhaps above $200K/yr, but this could be smoothed to avoid extremely high taxes on one-time sales, etc.). Passive income above $500K/yr would be taxed at the highest marginal rate. I’m pulling these levels out of thin air, and would want to do a more detailed analysis before determining the exact rates and income levels, but these numbers are probably pretty close to what I’d call optimal. Of course, I would allow for some smoothing, maybe over three years, so that windfall events don’t trigger the highest rate if most years only see very low returns.[/quote]
So, in essence, you are saying higher cap gain tax for EVERYONE. Those who currently make < $50k/year (those who are in the 10% and 15% tax bracket) are currently paying 0% in long term cap gain and same as their ordinary income for short term cap gain. You're punishing the investor in the 10% & 15% tax bracket, yet don't touch the day traders and the "speculators". You've been railing against "speculator", yet your proposal don't touch those guys but drastically affect those who are investors (those who hold their investments for at least a year). BTW, what's your definition of steep? Also, why stop at $500k? I'd say, we should have a billionaire tax. How about 80% tax on all time of incomes for billionaires? Is that steep enough?

[an]

[quote=CA renter]Let me clarify this a bit. I would tax passive income at around the same rate as earned income up to a certain amount (maybe up to $50K/year). After that, it graduates, and at some point, it would begin to get steeper (perhaps above $200K/yr, but this could be smoothed to avoid extremely high taxes on one-time sales, etc.). Passive income above $500K/yr would be taxed at the highest marginal rate. I’m pulling these levels out of thin air, and would want to do a more detailed analysis before determining the exact rates and income levels, but these numbers are probably pretty close to what I’d call optimal. Of course, I would allow for some smoothing, maybe over three years, so that windfall events don’t trigger the highest rate if most years only see very low returns.[/quote]
So, in essence, you are saying higher cap gain tax for EVERYONE. Those who currently make < $50k/year (those who are in the 10% and 15% tax bracket) are currently paying 0% in long term cap gain and same as their ordinary income for short term cap gain. You're punishing the investor in the 10% & 15% tax bracket, yet don't touch the day traders and the "speculators". You've been railing against "speculator", yet your proposal don't touch those guys but drastically affect those who are investors (those who hold their investments for at least a year). BTW, what's your definition of steep? Also, why stop at $500k? I'd say, we should have a billionaire tax. How about 80% tax on all time of incomes for billionaires? Is that steep enough?

[an]

[quote=CA renter]Let me clarify this a bit. I would tax passive income at around the same rate as earned income up to a certain amount (maybe up to $50K/year). After that, it graduates, and at some point, it would begin to get steeper (perhaps above $200K/yr, but this could be smoothed to avoid extremely high taxes on one-time sales, etc.). Passive income above $500K/yr would be taxed at the highest marginal rate. I’m pulling these levels out of thin air, and would want to do a more detailed analysis before determining the exact rates and income levels, but these numbers are probably pretty close to what I’d call optimal. Of course, I would allow for some smoothing, maybe over three years, so that windfall events don’t trigger the highest rate if most years only see very low returns.[/quote]
So, in essence, you are saying higher cap gain tax for EVERYONE. Those who currently make < $50k/year (those who are in the 10% and 15% tax bracket) are currently paying 0% in long term cap gain and same as their ordinary income for short term cap gain. You're punishing the investor in the 10% & 15% tax bracket, yet don't touch the day traders and the "speculators". You've been railing against "speculator", yet your proposal don't touch those guys but drastically affect those who are investors (those who hold their investments for at least a year). BTW, what's your definition of steep? Also, why stop at $500k? I'd say, we should have a billionaire tax. How about 80% tax on all time of incomes for billionaires? Is that steep enough?

[CA renter]

[quote=AN][quote=CA renter]Let me clarify this a bit. I would tax passive income at around the same rate as earned income up to a certain amount (maybe up to $50K/year). After that, it graduates, and at some point, it would begin to get steeper (perhaps above $200K/yr, but this could be smoothed to avoid extremely high taxes on one-time sales, etc.). Passive income above $500K/yr would be taxed at the highest marginal rate. I’m pulling these levels out of thin air, and would want to do a more detailed analysis before determining the exact rates and income levels, but these numbers are probably pretty close to what I’d call optimal. Of course, I would allow for some smoothing, maybe over three years, so that windfall events don’t trigger the highest rate if most years only see very low returns.[/quote]
So, in essence, you are saying higher cap gain tax for EVERYONE. Those who currently make < $50k/year (those who are in the 10% and 15% tax bracket) are currently paying 0% in long term cap gain and same as their ordinary income for short term cap gain. You're punishing the investor in the 10% & 15% tax bracket, yet don't touch the day traders and the "speculators". You've been railing against "speculator", yet your proposal don't touch those guys but drastically affect those who are investors (those who hold their investments for at least a year). BTW, what's your definition of steep? Also, why stop at $500k? I'd say, we should have a billionaire tax. How about 80% tax on all time of incomes for billionaires? Is that steep enough?[/quote] Okay, I'm not a CPA, and am not in the 10-15% rate group, so not sure how those with LT gains pay 0% if they earn $50K in regular income??? It's my understanding that you pay 15% on LT gains, irrespective of your earned income. Am I off on this? edit: Wow, found this: The tax rate on long-term gains was reduced in 2003 to 15%, or to 5% for individuals in the lowest two income tax brackets (See progressive tax).

http://en.wikipedia.org/wiki/Capital_gains_tax

Still, it doesn’t seem to be 0%. Where are you getting that from?

[CA renter]

[quote=AN][quote=CA renter]Let me clarify this a bit. I would tax passive income at around the same rate as earned income up to a certain amount (maybe up to $50K/year). After that, it graduates, and at some point, it would begin to get steeper (perhaps above $200K/yr, but this could be smoothed to avoid extremely high taxes on one-time sales, etc.). Passive income above $500K/yr would be taxed at the highest marginal rate. I’m pulling these levels out of thin air, and would want to do a more detailed analysis before determining the exact rates and income levels, but these numbers are probably pretty close to what I’d call optimal. Of course, I would allow for some smoothing, maybe over three years, so that windfall events don’t trigger the highest rate if most years only see very low returns.[/quote]
So, in essence, you are saying higher cap gain tax for EVERYONE. Those who currently make < $50k/year (those who are in the 10% and 15% tax bracket) are currently paying 0% in long term cap gain and same as their ordinary income for short term cap gain. You're punishing the investor in the 10% & 15% tax bracket, yet don't touch the day traders and the "speculators". You've been railing against "speculator", yet your proposal don't touch those guys but drastically affect those who are investors (those who hold their investments for at least a year). BTW, what's your definition of steep? Also, why stop at $500k? I'd say, we should have a billionaire tax. How about 80% tax on all time of incomes for billionaires? Is that steep enough?[/quote] Okay, I'm not a CPA, and am not in the 10-15% rate group, so not sure how those with LT gains pay 0% if they earn $50K in regular income??? It's my understanding that you pay 15% on LT gains, irrespective of your earned income. Am I off on this? edit: Wow, found this: The tax rate on long-term gains was reduced in 2003 to 15%, or to 5% for individuals in the lowest two income tax brackets (See progressive tax).

http://en.wikipedia.org/wiki/Capital_gains_tax

Still, it doesn’t seem to be 0%. Where are you getting that from?

[CA renter]

[quote=AN][quote=CA renter]Let me clarify this a bit. I would tax passive income at around the same rate as earned income up to a certain amount (maybe up to $50K/year). After that, it graduates, and at some point, it would begin to get steeper (perhaps above $200K/yr, but this could be smoothed to avoid extremely high taxes on one-time sales, etc.). Passive income above $500K/yr would be taxed at the highest marginal rate. I’m pulling these levels out of thin air, and would want to do a more detailed analysis before determining the exact rates and income levels, but these numbers are probably pretty close to what I’d call optimal. Of course, I would allow for some smoothing, maybe over three years, so that windfall events don’t trigger the highest rate if most years only see very low returns.[/quote]
So, in essence, you are saying higher cap gain tax for EVERYONE. Those who currently make < $50k/year (those who are in the 10% and 15% tax bracket) are currently paying 0% in long term cap gain and same as their ordinary income for short term cap gain. You're punishing the investor in the 10% & 15% tax bracket, yet don't touch the day traders and the "speculators". You've been railing against "speculator", yet your proposal don't touch those guys but drastically affect those who are investors (those who hold their investments for at least a year). BTW, what's your definition of steep? Also, why stop at $500k? I'd say, we should have a billionaire tax. How about 80% tax on all time of incomes for billionaires? Is that steep enough?[/quote] Okay, I'm not a CPA, and am not in the 10-15% rate group, so not sure how those with LT gains pay 0% if they earn $50K in regular income??? It's my understanding that you pay 15% on LT gains, irrespective of your earned income. Am I off on this? edit: Wow, found this: The tax rate on long-term gains was reduced in 2003 to 15%, or to 5% for individuals in the lowest two income tax brackets (See progressive tax).

http://en.wikipedia.org/wiki/Capital_gains_tax

Still, it doesn’t seem to be 0%. Where are you getting that from?

[CA renter]

[quote=AN][quote=CA renter]Let me clarify this a bit. I would tax passive income at around the same rate as earned income up to a certain amount (maybe up to $50K/year). After that, it graduates, and at some point, it would begin to get steeper (perhaps above $200K/yr, but this could be smoothed to avoid extremely high taxes on one-time sales, etc.). Passive income above $500K/yr would be taxed at the highest marginal rate. I’m pulling these levels out of thin air, and would want to do a more detailed analysis before determining the exact rates and income levels, but these numbers are probably pretty close to what I’d call optimal. Of course, I would allow for some smoothing, maybe over three years, so that windfall events don’t trigger the highest rate if most years only see very low returns.[/quote]
So, in essence, you are saying higher cap gain tax for EVERYONE. Those who currently make < $50k/year (those who are in the 10% and 15% tax bracket) are currently paying 0% in long term cap gain and same as their ordinary income for short term cap gain. You're punishing the investor in the 10% & 15% tax bracket, yet don't touch the day traders and the "speculators". You've been railing against "speculator", yet your proposal don't touch those guys but drastically affect those who are investors (those who hold their investments for at least a year). BTW, what's your definition of steep? Also, why stop at $500k? I'd say, we should have a billionaire tax. How about 80% tax on all time of incomes for billionaires? Is that steep enough?[/quote] Okay, I'm not a CPA, and am not in the 10-15% rate group, so not sure how those with LT gains pay 0% if they earn $50K in regular income??? It's my understanding that you pay 15% on LT gains, irrespective of your earned income. Am I off on this? edit: Wow, found this: The tax rate on long-term gains was reduced in 2003 to 15%, or to 5% for individuals in the lowest two income tax brackets (See progressive tax).

http://en.wikipedia.org/wiki/Capital_gains_tax

Still, it doesn’t seem to be 0%. Where are you getting that from?

[Author]

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