Are the rich paying their 'fair' share?

[Fake Boris]

Someone still has to explain me why value resulting from labor*capital-wage should be considered different than value from labor*capital-profit.

[Jon Miller]

Oh, well, that is pretty obvious and similar (but opposite) to what happens when you remove a tax....

I don't see how it has anything to do with whether taxes should be higher for CG/dividends or not.

For this sort of thing, the most important is what happens at the steady state, not what happens when you adjust that state.

JM
(And it wasn't clear that you were asking what would happen if we suddenly increased the taxes by 20%, I thought you were referring to two worlds where the only difference was the tax rate.)

[Dauphin]

I think you've missed the point entirely.

In simpler language, I'm asking what the effect on stock prices and yields is when introducing a dividend tax.

[Jon Miller]

I still think we are lacking information, although it does make it a bit more complicated if in both cases the share value can go up/down

everything else being equal, the share value in the first place would go up faster than the share value in the second case

still, for not doing any work, both would be quite wonderful deals

JM

[Dauphin]

why would shares stay valued at 100

Currently valued at $100.

[Jon Miller]

why would shares stay valued at 100, is it because there is no inflation and all net profit is given out in dividends? (in addition to there being plenty of other investments at the same rate?)

then we can assume the same is true for the second case?

with these assumptions, I am not sure what conclusions you desire to draw?

JM

[Dauphin]

Something to consider... If, in a world with no dividend or CG taxes, shares in company X paid a dividend of $5/share in perpetuity were valued at $100. What would be the effect on the share value if all dividends and CG were charged at 20% tax. What would be the effect on return on investment?

Mostly interested in seeing thought processes....

[Hauldren Collider]

I wouldn't worry about it. Once he takes the bar he won't actually be a human being anymore.

[Al B. Sure!]

You must know some ****ing dumb people then...

I know. They're liberals.

To be fair, only one guy bit and I'm not sure he's very liberal. He's currently a law student, though.

I was hoping to argue more.

[dannubis]

I'm actually making this argument on facebook right now. Among my friends, I feel like you on Apolyton

You must know some ****ing dumb people then...

[Al B. Sure!]

Without commenting on the argument itself, I have to say (as an economic illiterate and liberal arts weenie) that looking at that mass of variables hurt my eyes. Al's concrete-example way of expressing it, assuming you're talking about the same thing, was better. No offense intended.

His post is a lot cleaner and straight-forward. Algebra is a lot more concise than words. I also like his preference for taxes restraining consumption better than my use of ordinary and capital gains income.

In general, I have criticized KH and Kuci for assuming the education of their audience, but Jaguar is always pretty good at explaining things. The way he kept indicating which portions were wage income and which were capital gains would be helpful to a student.

[Jaguar]

Without commenting on the argument itself, I have to say (as an economic illiterate and liberal arts weenie) that looking at that mass of variables hurt my eyes. Al's concrete-example way of expressing it, assuming you're talking about the same thing, was better. No offense intended.

None taken. My post is the formalized, general algebra of what his second paragraph said. His first paragraph made additional points that I didn't make, but they are worth thinking about.

[DinoDoc]

The big majority opted for a lower tax bill when asked to choose specific rates; precisely 75 percent said the right level for top earners was 30 percent or below.

The current rate for top earners is 35 percent. Only 4 percent thought it was appropriate to take 40 percent, which is approximately the level that President Obama is seeking from January 2013 onward.

The Hill poll also found that 73 percent of likely voters believe corporations should pay a lower rate than the current 35 percent, as both the White House and Republicans push plans to lower rates.

The new data seem to run counter to several polls that have found support for raising taxes on high-income earners. In an Associated Press-GfK poll released Friday, 65 percent said they favored President Obama’s “Buffett Rule” that millionaires should pay at least 30 percent of their income. And a Pew poll conducted in June found 66 percent of adults favored raising taxes on those making more than $250,000 as a way to tackle the deficit.

The American people already seem to think the rich pay more than their fair share: http://thehill.com/polls/212643-hill...duals-business

[onodera]

Al, your article is talking about top 10 percent, not top 1 percent. The former includes quite a lot of middle class and everyone knows that it's the middle class that pays the heaviest.

[Elok]

If you could have understood that in fewer words, great for you. Other people might benefit from the airtight algebra. Most of the formulae are just copy and paste from the initial version, with the new taxes added in. I don't feel bad about spending seven or eight minutes on a post that explains a simple concept that many leftists, including and especially President Obama, are unable to understand.

Without commenting on the argument itself, I have to say (as an economic illiterate and liberal arts weenie) that looking at that mass of variables hurt my eyes. Al's concrete-example way of expressing it, assuming you're talking about the same thing, was better. No offense intended.