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Post 09 Nov 2017, 4:11 pm

Ray Jay wrote:Much passive income (interest, certain dividends, short term capital gains) is taxed at the highest rate. It's taxed at the top marginal rate plus the 2.9% ACA tax. I do agree with other aspects of your comments.


Further, qualified dividends and long-term gains are, for most folk, a larger share of their passive income than non-qualified dividends, short-term gains and interest. There are good reasons these are taxed more highly than long-term and qualified dividends.

One possible solution would be to tax earned income at the rate we tax qualified dividends and capital gains, and then make interest, non-qualified dividends and short-term gains a much higher rate.
Last edited by geojanes on 10 Nov 2017, 11:22 am, edited 3 times in total.
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Post 10 Nov 2017, 4:24 am

geojanes wrote:
Ray Jay wrote:Much passive income (interest, certain dividends, short term capital gains) is taxed at the highest rate. It's taxed at the top marginal rate plus the 2.9% ACA tax. I do agree with other aspects of your comments.


These are not subject to social security taxes. Earned income remains the highest taxed income. INSANE.


technically not true ... at those levels you are not subject to additional social security tax ... you are subject to Medicare tax which is 1.45% or 2.9% if you are self employed. So, interest income and other passive income is taxed more heavily than earned income at the top income levels. Interest income, non-qualified dividends, and short term capital gains are taxed at the top marginal rates PLUS the 3.8% ACA tax.
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Post 10 Nov 2017, 10:31 am

Ray Jay wrote:
geojanes wrote:
Ray Jay wrote:Much passive income (interest, certain dividends, short term capital gains) is taxed at the highest rate. It's taxed at the top marginal rate plus the 2.9% ACA tax. I do agree with other aspects of your comments.


These are not subject to social security taxes. Earned income remains the highest taxed income. INSANE.


technically not true ... at those levels you are not subject to additional social security tax ... you are subject to Medicare tax which is 1.45% or 2.9% if you are self employed. So, interest income and other passive income is taxed more heavily than earned income at the top income levels. Interest income, non-qualified dividends, and short term capital gains are taxed at the top marginal rates PLUS the 3.8% ACA tax.


Social security is income limited, but as you say medicare is not, 2.9%, but then you are leaving out the additional 1.8% of medicare tax that kicks in over 200K. That;'s a total of 4.7%, 1/2 paid by the employer and half by the wage earner. If we're talking total taxes paid, earned income is, was and remains the highest taxed income.
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Post 10 Nov 2017, 11:01 am

Another recruit to the liberal camp? Gosh, I hope so...it's getting lonely over here.

What a novel concept. Those who are actually working to make income...doing stuff...making a concrete contribution to societal wealth...should at the very least not have to pay a higher rate on income than those who are sitting on their butt and making money.
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Post 10 Nov 2017, 11:24 am

I'm trying to do a reply with quote and I'm editing my earlier post . . . Strange . . .
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Post 10 Nov 2017, 3:21 pm

freeman3 wrote:Another recruit to the liberal camp? Gosh, I hope so...it's getting lonely over here.

What a novel concept. Those who are actually working to make income...doing stuff...making a concrete contribution to societal wealth...should at the very least not have to pay a higher rate on income than those who are sitting on their butt and making money.


How dare you impugn the character of welfare recipients!
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Post 13 Nov 2017, 7:38 am

geojanes wrote:
Ray Jay wrote:
geojanes wrote:
Ray Jay wrote:Much passive income (interest, certain dividends, short term capital gains) is taxed at the highest rate. It's taxed at the top marginal rate plus the 2.9% ACA tax. I do agree with other aspects of your comments.


These are not subject to social security taxes. Earned income remains the highest taxed income. INSANE.


technically not true ... at those levels you are not subject to additional social security tax ... you are subject to Medicare tax which is 1.45% or 2.9% if you are self employed. So, interest income and other passive income is taxed more heavily than earned income at the top income levels. Interest income, non-qualified dividends, and short term capital gains are taxed at the top marginal rates PLUS the 3.8% ACA tax.


Social security is income limited, but as you say medicare is not, 2.9%, but then you are leaving out the additional 1.8% of medicare tax that kicks in over 200K. That;'s a total of 4.7%, 1/2 paid by the employer and half by the wage earner. If we're talking total taxes paid, earned income is, was and remains the highest taxed income.


That's not entirely correct. The additional Medicare tax is .9% whether you have wage income or self employment income. So the total tax on earned income is 3.8% higher, but some of that tax may be deductible. Whereas the tax on passive income is 3.8% additional, and it is not deductible. In any case, these are small differences.

The irony of this technical discussion is it shows how unbearably complex the US tax code is, and how Obama layered on both higher marginal rates and loads of complexity.
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Post 22 Nov 2017, 11:29 am

I have a 2 week delay for the dealer to fix my car (on a somewhat critical safety issue ... they only have 2 out of the 4 mechanics that they require and the jobs have not been filled for 2 months ... this is profitable work for them ... the unemployment rate in Mass. is 3% ... to Geo's point, we do need more immigration in this country and it will soon create a bottleneck that hampers growth and causes inflation, esp. if we have tax reform.
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Post 22 Nov 2017, 12:33 pm

Ray Jay wrote:I have a 2 week delay for the dealer to fix my car (on a somewhat critical safety issue ... they only have 2 out of the 4 mechanics that they require and the jobs have not been filled for 2 months ... this is profitable work for them ... the unemployment rate in Mass. is 3% ... to Geo's point, we do need more immigration in this country and it will soon create a bottleneck that hampers growth and causes inflation, esp. if we have tax reform.


I agree we need immigration. However, illegal immigration is not helpful. (and you were not suggesting it)

Nothing will get done regarding immigration unless both parties stop posturing, which they won't.

What does the dealer pay? I won't take the job, but I might be able to find someone. :)
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Post 29 Nov 2017, 9:12 am

Corporations are indicating they are going to largely just give the savings in tax cuts to shareholders. As expected.

https://www.google.com/amp/s/www.bloomb ... -investors
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Post 29 Nov 2017, 9:26 am

freeman3 wrote:Corporations are indicating they are going to largely just give the savings in tax cuts to shareholders. As expected.

https://www.google.com/amp/s/www.bloomb ... -investors


From your link:

To be sure, some company leaders have explicitly said that corporate tax cuts would cause them to invest in jobs and wages. AT&T pledged to increase U.S. investment by $1 billion in 2018 if the tax bill passed.

“This bill will stimulate investment, job creation and economic growth in the United States,” the company’s chairman and CEO, Randall Stephenson, said in a Nov. 8 statement.


The idea that corporations would refrain from investing and only pay off debt and buy back stock in perpetuity is pretty bizarre. Then again, this is today's Democratic, nee Socialist, party. Corporations are "evil" except when they are bankrolling Democratic Presidential candidates.
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Post 29 Nov 2017, 11:14 am

One company does not an economic recovery make...many more companies said differently.

Yeah, it would be pretty bizarre if companies only paid off debt, bought back stock, and distributed money to shareholders in perpetuity. But that's not what is being contended, so nice straw man there. The question is whether tax cuts would cause business investment to appreciably increase. And it's not bizarre to question that it will, given the excess cash businesses are already sitting on and how they themselves indicate they are going to use the tax cuts.

Maybe instead of tax cuts that will possibly increase business investment, maybe they should incentivize business investment with tax credits. I know, crazy idea...do directly what you could (maybe, possibly) do indirectly.
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Post 29 Nov 2017, 2:47 pm

freeman3 wrote:One company does not an economic recovery make...many more companies said differently.

Yeah, it would be pretty bizarre if companies only paid off debt, bought back stock, and distributed money to shareholders in perpetuity. But that's not what is being contended, so nice straw man there. The question is whether tax cuts would cause business investment to appreciably increase. And it's not bizarre to question that it will, given the excess cash businesses are already sitting on and how they themselves indicate they are going to use the tax cuts.

Maybe instead of tax cuts that will possibly increase business investment, maybe they should incentivize business investment with tax credits. I know, crazy idea...do directly what you could (maybe, possibly) do indirectly.


Not a strawman, but a point: even if some corporations do as liberals "fear" in the short run, they won't in the long run. More money in the economy is not a bad thing.

Republicans need to be more blunt about it: government is great at one thing, namely spending your money in ways that you would never permit it to be spent if you had a say in the matter.

Tax credits = more loopholes. The more of those we create, the longer the tax code is, the more Byzantine tax prep becomes, and the more shifty accountants are employed. Is that the goal?
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Post 30 Nov 2017, 4:57 am

Fate:
Republicans need to be more blunt about it: government is great at one thing, namely spending your money in ways that you would never permit it to be spent if you had a say in the matter.

Very will put, although sometimes the Republicans are the spenders.

Freeman's critique also doesn't take into account that Corporations will more likely form in the US, move profits to the US, etc. Even foreign corporations will be more likely to show their taxable income in the US vs. other countries. Currently foreign corporations shift income away from the US through accounting tricks.
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Post 30 Nov 2017, 10:17 am

Ray Jay wrote:Very will put, although sometimes the Republicans are the spenders.


No argument from me. We have two "big government" parties. That is reflected in the erosion of our Constitutional rights, and our overall freedoms. It's reflected in our spending, in the growth of entitlements, and in our political campaigns. We have become a nation seeking to leverage government to get more for ourselves. That is not how this nation was founded.

Freeman's critique also doesn't take into account that Corporations will more likely form in the US, move profits to the US, etc. Even foreign corporations will be more likely to show their taxable income in the US vs. other countries. Currently foreign corporations shift income away from the US through accounting tricks.


He, like most progressives, views economics as zero-sum. The only way a corporation gets a break is to hose someone else. It's not accurate and, ultimately, it traces back to the notion that all money, or at least tax money, belongs to the government. All of the income of this country belongs to the people who earn it. While I am not in the "taxation is theft" crowd, government should be a lot more reluctant to take money from earners than it is.