for nye

[notyoueither]

That's been explained to you repeatedly, too. So any further tax on capital gains is punishment for saving.

I'd say being able to save and receive a return with some security is a bonus.

Stop *****ing and pay your bit.

[Kuciwalker]

The income he earns today has not been taxed already.

nye, don't lie. I worked out a nice big example for you.

[KrazyHorse]

NYE might be in Ben's league for intellectual dishonesty.

[notyoueither]

I thought you said you got that part already.

Paying tax once, today, does not pay for services and benefits received for the rest of your life.

[notyoueither]

nye, don't lie. I worked out a nice big example for you.

I do not accept that income from investments was already taxed.

It is new income.

[Solomwi]

Paying tax once, today, does not pay for services and benefits received for the rest of your life.

So no, you didn't get it.

[Kuciwalker]

I do not accept that income from investments was already taxed.

It is new income.

Repeating it doesn't make it true.

In my example, with a 20% earned income tax, Bob ended up with 80% of what he would have had, post-tax. i.e. he is being taxed at a 20% rate. With the addition of a 20% capital gains tax, he ended up with about 79% of what he would have had, post-tax, which means he was being taxed at 21% compared to 20% for someone who didn't save. This small disparity becomes if you save over longer period of time.

[notyoueither]

No, that leaves Bob with 64% of what he would have had without the tax.



Bob is already paying 80% tax on his income because he would be getting $125K if there were no tax.

I get that.

I don't necessarily agree that paying tax once, twenty years ago, fulfils all furture tax obligations.

Bob saved and bought stocks. Sally saved and went to med school, or invested in an MBA. Sally will be paying a lot more tax in the future based on her choice of where she invested her capital. So should Bob.

[Solomwi]

You clearly don't get that.

[notyoueither]

Repeating it doesn't make it true.

In my example, with a 20% earned income tax, Bob ended up with 80% of what he would have had, post-tax. i.e. he is being taxed at a 20% rate. With the addition of a 20% capital gains tax, he ended up with about 79% of what he would have had, post-tax, which means he was being taxed at 21% compared to 20% for someone who didn't save. This small disparity becomes if you save over longer period of time.

Only if you exclude investment return from income.

Bob earns 100K salary and pays 20K tax. Bob saved and gets 5K return, 1K of which is taxed. Bob has an income of 105K and pays 21K tax (20%).

[Kuciwalker]

I get that.

I don't necessarily agree that paying tax once, twenty years ago, fulfils all furture tax obligations.

What does this even mean?

Bob saved and bought stocks. Sally saved and went to med school, or invested in an MBA. Sally will be paying a lot more tax in the future based on her choice of where she invested her capital. So should Bob.

This example doesn't make sense. In what conceivable world is Bob able to live off of the price of med school and 'earn' as much in a year as a doctor would?

[Kuciwalker]

Only if you exclude investment return from income.

No! That has nothing to do with it! Did you even read what I was talking about?

The only way to calculate the total tax rate is figure out how much money Alice and Bob would have if there were no taxes, and then compare that to how much money they have after taxes. In my example, Alice has 80% of the money she would have had, and Bob has 79%.

[notyoueither]

What does this even mean?



This example doesn't make sense. In what conceivable world is Bob able to live off of the price of med school and 'earn' as much in a year as a doctor would?

Bob invested in stocks and did not go to school. He keeps earning whatever wage he started with and makes extra cash off his investments.

Sally went to school instead of saving. She now makes double what Bob does and pays twice as much tax on income.

You want Bob to not have to pay any tax on his investment. Sally is paying a lot.

[Solomwi]

Year 1: Bob and Sally each earn salaries of $100,000. Both are taxed 20% and end up with $80,000 at their disposal. Bob saves it all. Sally spends hers.

Year 2: Bob and Sally each still earn $100,000 salaries. Bob also makes $4,000 off his savings. With a 20% capital gains tax, Bob pays $20,000 on his salary, $800 on his return, leaving him with $83,200. With no taxes at all, Bob would have $105,000, since he would have been able to invest the entire Year 1 salary. 83,200/105,000 = 79%. He therefore pays a 21% tax in Year 2. Sally pays 20% again. Bob's been penalized for saving. With no capital gains tax, Bob is left with $84,000, 80% of what he would have had otherwise. He and Sally pay the same proportion of their income (20%) in taxes. Either way, Bob pays the 20% Year 1 tax year after year.

How is this difficult to see?

[Kuciwalker]

re: nye

1) As I said, there's a decent case for spending on education to be tax-favored (e.g. you should be rebated for it).

2) Bob and Sally both end up with 80% of the income they would have had if there had been no tax. (In Sally's case this might not be quite true if she could have bought a better education that earned her more money, but that is solved by the rebates I suggested.)