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The widening gap between the wealthiest Americans and everyone else has been matched by a slowdown in state tax revenue, according to a report being released Monday by Standard & Poor's.
Even as income for the affluent has accelerated, it's barely kept pace with inflation for most other people. That trend can mean a double-whammy for states: The wealthy often manage to shield much of their income from taxes. And they tend to spend a lower percentage of it than others do, thereby limiting sales tax revenue.
As the growth of tax revenue has slowed, states have faced tensions over whether to raise taxes or cut spending to balance their budgets as required by law.
"Rising income inequality is not just a social issue," said Gabriel Petek, the S&P credit analyst who wrote the report. "It presents a very significant set of challenges for the policymakers
."
Raise taxes and wealth tends to show how mobile it can be.
Interesting read and study on a significant problem as state revenues tighten
Raise taxes and wealth tends to show how mobile it can be.
That wealth needs to be extracted from them by other means...
principally in the form of better wages at the middle and bottom...
so that the middle and bottom can afford to pay more (or anything) in taxes.
Too many are paying too little or no tax or worse yet... are net receivers of taxes.
This last is the real issue because even if we turned off the tap tomorrow...
it'll still take 30 years for that mess of dependency to pass it's way through.
That wealth needs to be extracted from them by other means...
principally in the form of better wages at the middle and bottom...
so that the middle and bottom can afford to pay more (or anything) in taxes.
Too many are paying too little or no tax or worse yet... are net receivers of taxes.
This last is the real issue because even if we turned off the tap tomorrow...
it'll still take 30 years for that mess of dependency to pass it's way through.
All they have to do is tax capital gains like regular income and close the loopholes. Problem solved.
Capital gains taxes represent an additional tax on a dollar of income that has already been taxed multiple times. For example, take an individual who earns a wage and decides to save by purchasing stock. First, when he earns his wage, it is taxed once by the federal and state individual income tax. He then purchases stock and lets his investment grow. However, that growth is smaller than it otherwise would have been due to the corporate income tax on the profits of the corporation in which he invested.[7] After ten years, he decides to sell the stock and realize his capital gains. At this point the gains (the difference between the value of the stock at purchase and the value at sale) are taxed once more by the capital gains tax. Even more, the effective capital gains tax rate could be even higher on your gains due to the fact that a significant difference in the value of the stock is due to inflation, not real gains
Quote:
As people prefer consumption today due to the tax bias against savings, there will be less available capital in the future. For investors, this represents less available capital for factories, machines, and other investment opportunities. Additionally, the capital gains taxes create a lock-in effect that reduces the mobility of capital.[9] People are less willing to realize capital gains from one investment in order to move to another when they face a tax on their returns. Funds will be slower to move to better investments, further slowing economic growth.
Really problem solved or new ones created. If we don't sell we aren't paying capital gains. Oh yeah and pension funds taxation? Annuities? Retirement funds? etc etc etc.
Really problem solved or new ones created. If we don't sell we aren't paying capital gains. Oh yeah and pension funds taxation? Annuities? Retirement funds? etc etc etc.
And once gain you both completely miss the boat, resulting in the usual, vaudevillian laughing stock of "economics". One of ya want to tax labor. The other wants to tax capital. Hardy, har, har, both kill industry.
None of you want to tax the problem so easily seen in classical liberalism. On the other hand taxing the man in the toll booth and taxing the company that makes toll booths might help.....So I am not completely against taxing labor and capital.
I'm maxing my 401(k) and thus avoiding paying any CA state tax on that income. When I retire and pull form my 401(k) I'll be no longer living in an income-tax state, so CA will never receive taxes on that income.
With the rates these states are charging these days, it's little wonder people are doing their best to avoid taxes. States are going to have to cut spending. If CA increases taxes too much more, it becomes worth it to leave the state completely.
All they have to do is tax capital gains like regular income and close the loopholes. Problem solved.
That taxation of long term capital gains is different than taxation of ordinary income is hardly a loophole. There is no consensus among economists about how to treat capital gains for taxation purposes.
Short term capital gains are already taxed as income.
I'm maxing my 401(k) and thus avoiding paying any CA state tax on that income. When I retire and pull form my 401(k) I'll be no longer living in an income-tax state, so CA will never receive taxes on that income.
With the rates these states are charging these days, it's little wonder people are doing their best to avoid taxes. States are going to have to cut spending. If CA increases taxes too much more, it becomes worth it to leave the state completely.
Same with public employees who retire from the state that pays their pension.
Raise taxes and wealth tends to show how mobile it can be.
tax their property and assets and lets see what happens.
will they sell them and crash the housing market?
maybe, maybe not
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