Obama's Capital Gains Tax

[Imran Siddiqui]

Well, if you are that concerned about an independent body fiddling with our investment incentives....

After all, fiddling with rates has similar effect (if not greater effect). What's the difference?

[Kidlicious]

Direct control of investment you could consider Marxist, but just changing rates is not direct control.

[DirtyMartini]

Obama's proposal to raise the CGT is pander to working class americans. it's identical to his "excess profits tax" on the oil companies. The people whose votes he needs don't like hedge funds managers paying 15% tax on their multi million dollar don't-call-it-a-salary any more than they like record profits juxtaposed with $4 gas.

I don't know much 'bout economics, but raising the CGT with the market currently staggering seems foolish. If he's interested in fairness and pandering, rather than proposing raising the CGT he should have proposed simply closing that particular loophole and make the hedge fund managers count their comissions as income rather than capital gains -- that seems fair.

[rah]

It must make economic sense because the "ONE" said so.

[Zkribbler]

Originally posted by rah
It must make economic sense because the "ONE" said so.

...and because it makes sense and is fair. Why should I pay a higher pecentage of my salary in taxes than do rich people who make their money by not working for it?

Why do Republican economists so hate the middle class ... and middle-class children and grandchilden?

[rah]

The Republicans don't hate the middle class. It the dems that do, by stealing all their hard earned money to support the welfare state.
If you think the middle class doesn't benefit from CGs, you're being a bit silly.

[Zkribbler]

Here's a portion of an editorial in the St.Petersburg Times:

But would raising the capital gains tax hurt the middle class? We conclude the answer is largely no: Only a small percentage of middle-class taxpayers pay capital gains taxes, no more than 11 percent. On the other hand, among higher-income taxpayers, about 51 percent pay the capital gains taxes.

Walk with us into a thicket of data from the Internal Revenue Service (C'mon ... It'll be fun!) and we'll show you how we came to these conclusions.

We looked at data from 2005, the most recent year for which the IRS has released detailed data.

First, we had to decide which taxpayers are "middle class." Based on the data brackets, we counted everyone who reported income of less than $200,000, which we think is fairly generous to the RNC's point.

Two categories of income are subject to capital gains taxes: taxable net gains and capital gains distributions (typically profits from mutual funds that are not part of a retirement plan). A taxpayer can report income in one or both categories, although most file in the first category. We're counting both categories as different taxpayers because we can't know how many people report income in both categories. For this reason, our numbers are going to be slight overestimates. Again, this will favor the RNC's point.

Next, we added up the number of taxpayers who reported income in those two categories, so we could find out how many taxpayers were subject to capital gains taxes in 2005.

Among tax filers making $200,000 or less, about 14.3-million of 130.8-million filers reported income subject to capital gains taxes. That's about 11 percent.

Among tax filers making more than $200,000, about 1.8-million of 3.6-million filers reported income subject to capital gains taxes. That's about 51 percent.

So only 11 percent of what we're calling middle-class people report capital gains, while 51 percent of wealthier people report it.

If we removed people reporting income of less than $25,000, that percent would drop to 8.5 percent. And if we also decided we were too generous with our definition of middle class, and only counted people making under $100,000, that percentage would drop further, to 6 percent.

"The capital gains tax largely affects very high-income people," said Eric Toder, a tax policy expert with the Tax Policy Center, a joint project of the Brookings Institution and the Urban Institute in Washington, D.C., which both liberal and conservative economists consider credible.

The ad then says the tax will hurt 100-million Americans who own stocks, a claim we looked at previously. We found that raising capital gains taxes would not directly affect most working people saving for retirement. Tax-exempt retirement accounts like 401(k)s and individual retirement accounts (IRAs) are not subject to capital gains taxes. Most home sales are not subject to the capital gains tax either, an issue we've written about previously.

The ad says that Obama's plan to raise capital gains taxes "hurts the middle class," but it's hard to see how that's true of a tax that directly affects — at most — 11 percent of a very generous definition of the middle class. Are there a few middle-class people who pay the tax? Sure. But on the whole, capital gains taxes are disproportionately paid by higher-income brackets. We find the RNC's claim to be Barely True.

[snoopy369]

I think that post blatantly ignores the fact that raising the CGT tax is argued to hurt the economy, costing folks jobs and costing small businesses (run often by the semimythical middle class) investments needed to start or stay in business.

[snoopy369]

Originally posted by Ben Kenobi


Couple things wrong with your approach.

1. I'm a college graduate. I don't need economics lessons 'dumbed down'.

2. Since you presume to be an expert on economic theory, why is it so difficult to cite a source that economists find persuasive?

3. You are assuming I myself will not check the sources, and presuming I am unwilling to learn more about the topic, and also presuming I haven't already read that particular article.

4. You are assuming that 'everyone who reads this thread agrees with you', which is not true.

5. You also managed to misrepresent my own position, all in the span of a single post.

That's 5 things wrong with your statement right there.

Please cite a source that economists will find persuasive and I promise you I will read it and consider your evidence.

I don't believe that a 15 percent capital gains tax is detrimental to revenues in the long term, and I would be interested in seeing evidence that corroborates with your BAM.

Being a college graduate isn't worth **** in my book. Most of the folks I know who are not college graduates are about as intelligent as those who are, in fields that neither have any education in.

The fact that you clearly have no understanding of what the CGT is, led me to link you to an explanation of what it is For things like this (facts which are not generally disputed), Wiki is a quite useful source, even for very specific pieces of knowledge.

You can ignore that if you want ... nobody else here is talking about taxing corporations, so you will continue to sound like a moron, because you don't have any understanding of the topic at hand, and instead just quote what you think is the republican party line (which it isn't, by the way). I'm not doing your research for you ...

A 15 percent CGT is (probably, neither I nor anyone else here has access to the full data on this) not beneficial for revenues, in the long run. It may or may not be beneficial in the short run. I believe that if it is reliable for a certain period of time, it might be beneficial, but the current unreliable nature of the CGT rate does not benefit anyone.

[snoopy369]

Originally posted by SpencerH


Is that supposed to be an answer to my question? it doesnt look like it.

EDIT: after reading a subsequent response I believe I understand your meaning.

Werent you planning to be a buddist monk or something? I'm not sure how that coincides with what appears to be your desire to use the CG tax rate to effect investment cash flow (primarily from the middle class). Is that out of the Marxist monk handbook?

That would be Blake. I have no idea how you managed to confuse the two of us ...

[rah]

So only 11 percent of what we're calling middle-class people report capital gains, while 51 percent of wealthier people report it.

Ok they used percentages. How about raw numbers. Does anyone think that 11% of the middle class is a larger number than 51% of the upper class?

I would bet so, or the might have included those numbers. But then it would look like it hurts the middle class so we can't possible report that. The "ONE" has spoken.

[snoopy369]

Originally posted by SpencerH


The government per se doesnt fiddle with the rates, the Federal Reserve, an independent arm of the government, does. What he alluded to is direct governmental control of the amount of investment money via changes to the CGT. Such changes primarily effect the choice of whether or not to invest made by small investors, not wealthy ones. I support the concept that a greater diversity of investors is good for the country in a variety of ways.

That is actually entirely inaccurate to what I said. I suggested giving the Federal Reserve control of the CGT rate ... so, is that okay with you?

[Zkribbler]

Originally posted by snoopy369
I think that post blatantly ignores the fact that raising the CGT tax is argued to hurt the economy, costing folks jobs and costing small businesses (run often by the semimythical middle class) investments needed to start or stay in business.

Capital gains taxes become due when the asset making them is sold. If your small-business owner is selling the business, why does he need a tax break in order to run it?

All I'm saying is that I shouldn't be taxed for my work at a higher rate than more wealthy people are for not working. Income is income is income. Let all sources be taxed the same.

[Patroklos]

Capital gains taxes become due when the asset making them is sold. If your small-business owner is selling the business, why does he need a tax break in order to run it?

Why should that small business owner have to pay taxes after pouring his heart and soul into a successful tax paying buisness for years?

I think people also need to remember that CG are in many cases a significant portion of a persons retirement. It makes perfectly good sense to take money away from those responsible enough to plan for their future to make up for those who didn't.

[Dauphin]

Originally posted by Zkribbler
Here's a portion of an editorial in the St.Petersburg Times:

Among tax filers making $200,000 or less, about 14.3-million of 130.8-million filers reported income subject to capital gains taxes. That's about 11 percent.

So only 11 percent of what we're calling middle-class people report capital gains, while 51 percent of wealthier people report it.

If we removed people reporting income of less than $25,000, that percent would drop to 8.5 percent.

The necessary result of this stat is that the 'working class' (ie those earning less than $25,000) have more to excessively more capital gains tax filers than the middle class (ie those earning between $25,000 and $200,000).

Personally I think the article has messed up its numbers.