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What is it with people and capitol gains tax? Seriously, why is it you want to increase the taxes in it? Do you even realize what you are trying to discourage people from doing?
You want people to invest. You want them to put their money back into the system through stocks, bonds, mutual funds, real estate, or any other financial instrument. Thats banking on our economy. If you tax that heavily, you will stop people investing as much and if people stop investing, you will eventually suffer for that. The system is all related.
When I moved to Texas, I cashed in some of my stocks to pay for my move. I paid roughly 10% taxes on this cash in. Why do you want to increase that? You do realize that if you keep increasing taxes on things like that, you will eventually make the risk of investment unworthy of the effort do you not?
My mother had some stock and the company forced it to sell. My mother was forced to take the money from the sale and then she was forced to pay a capitol gains tax. She isn't some "rich" person, yet she was paying the tax regardless. Simply because people think those who buy stocks and invest are rich? That everyone who sells their stocks should pay more than the standard taxable rate?
She didn't have the money to play the investment game and take other avenues to avoid getting the hefty tax. So all of this "rich person" head hunting does is to hurt those who are attempting to invest in their future.
My wife is finishing up her masters in global business management and she shakes her head at how ignorant people are about what they want to overtax and attack in their crusade to target their "evil rich person (tm)" We are hurting ourselves by doing this. We are taking away the advantages of making money by actually helping our economy. We should be rewarding that, not penalizing it.
What about the people who receive most of their income in the form of stocks or capital gains? Should hedge fund managers get a tax break for investing other people's money? There has to be a way to allow those with real capital gains to be taxed at a different % compared to those who receive it as salary.
That argument is old and tired. People are NOT going to stop investing simply because they are taxed at a higher rate (Warren Buffet even agreed with that) - after all, before the Capital Gains Tax was lowered people were investing.
I'm not making any "evil rich people" comments (your words, not mine) simply questioning why folks who make the majority of their income through capital gains should pay LESS than the working folks.
Remember, this is not just MY opinion, this is Warrent Buffet we're talking about. If HE says the Capital Gains Tax is too low, then I'm inclined to believe him.
Ken
Ohh Warren Buffet, I shall drop to my knees and worship him then. I am sorry, I misunderstood, I thought you meant Jimmy Buffet, since it is Warren Buffet, I am willing to blindly accept his word with my "belief".
Sorry, I ain't buying it. Here is a little piece that puts things into perspective. You can "believe" based on someones income, I will stick to logical explanations on the issue to make my decisions.
Warren Buffet Lies from the Pulpit
by Don Luskin (May 21, 2003)
Ah, the beloved Warren Buffett. He's the second richest man in the world according to Forbes, and he's America's self-appointed corporate virtue czar, the Bill Bennett of the executive suite. He's the one whose folksy Berkshire Hathaway Corporation annual reports sermonize against the sins of stock options, demonize the coming debacle in derivatives, and preach against the perils of pension accounting. And he's the one who wrote an op-ed in the Washington Post yesterday blasting President Bush's plan to eliminate the unfair double taxation of dividends -- using arguments based on accounting tricks that would make Arthur Andersen blush.
It's ironic. In the column he talks about "voodoo economics" and "Enron-style accounting" -- but that's precisely what Buffett has no choice but to stoop to in order to justify his position that eliminating dividend taxes "would further tilt the tax scales toward the rich." Tilt? Further? According to the Internal Revenue Service, the top 10% of American households by income pays 66% of all the income taxes, and according to the Congressional Budget Office (http://www.cbo.gov/showdoc.cfm?index=3089&sequence=0 - broken link), the relative burden on the highest income-earners has gotten heavier over the last two decades.
Yet Buffett starts by making the extraordinary claim that he and his receptionist currently both pay the same 30% of their very different incomes to the federal government. This is pretty much impossible unless receptionists in Omaha are paid more than the CEO's of the companies they work for. Buffett takes a salary of $100,000 from Berkshire Hathaway (according to the company's most recent proxy statement) -- and assuming that his receptionist makes the same amount, then her average federal tax rate would be something like 16%, according to the IRS's online calculator (broken link). Adding the 6.2% payroll tax paid by her employer, we get to about 22%. Her salary would have to be about $250,000 to get up to the 30% Buffett claims. Can I have her job?
Okay, let's give Buffett a pass on that one and assume he's got the highest paid receptionist in Omaha (or anywhere else). Even if he and she are both paying 30% of their income in federal taxes, are they in any sense equal as taxpayers? No -- because the dollar amounts of their payments are vastly different. At 30% of $250,000, the reception is paying $75,000 in taxes. Working backward from figures provided by Buffett in his column, we can guess that his income must be something like $50.3 million dollars. 30% of that is $15.1 million.
Buffett isn't paying the same as his receptionist -- he's paying 201 times more.
Now let's see how that would change if taxes on dividends were eliminated. Buffett looks at a scenario in which Berkshire Hathaway declares a $1 billion dividend (it actually pays no dividend currently), to which 31% stakeholder Buffett would be entitled to $310 million tax free. That would raise his total income to $360.3 million, on which Buffett says he'd pay an average tax rate of 3%. Buffett says, "And our receptionist? She'd still be paying about 30 percent, which means she would be contributing about 10 times the proportion of her income that I would to such government pursuits as fighting terrorism, waging wars and supporting the elderly."
But 3% of $360.3 million is $10.8 million -- still 144 times what the receptionist would pay.
But be that as it may, here's Buffett's big accounting trick: what he doesn't tell you is that, because Berkshire Hathaway pays no dividend now, if it were to pay one tax-free in the future nothing would change! Yes, Buffett's money would be transferred from his corporate pocket to his personal pocket -- but if he wanted to transfer it back, Berkshire Hathaway could issue more stock and he could buy it. Nothing would change.
Buffett's average tax rate would not even change in the way he claims it would. Yes, income from dividends he's already receiving would become tax-free. But other than that, if he claims that his new tax rate would be 3%, then it must be pretty close to 3% now -- except that Buffett is choosing to arbitrarily not consider as income his money already being earned inside Berkshire Hathaway that is simply not being paid out. It's still his.
In that sense, Berkshire's failure to pay that money out to him right now and subject it to today's dividend tax rates is, at heart, a tax shelter (of which Buffett says in the column "I've never used any").
And Buffett pulls another big accounting swindle when it comes time to recommend what he would do rather than eliminate dividend taxes. "Instead, give reductions to those who both need and will spend the money gained… Putting $1,000 in the pockets of 310,000 families with urgent needs is going to provide far more stimulus to the economy than putting the same $310 million in my pockets."
The swindle? Buffett pretends the proposed tax cut was the entire $310 million value of the dividend, not just the elimination of the current tax on the dividend. Bush's plan wouldn't have never have put $310 million in Buffett's pocket -- all it would have done is save him the tax on $310 million, call it $110 million. Sound familiar? Paul Krugman makes Bush's tax cuts look expensive by "forgetting" to divide by ten; Buffett's not a Ph.D. economist, so he only "forgets" to divide by 3.
Buffett moralizes, "When I was young, President Kennedy asked Americans to 'pay any price, bear any burden' for our country." Yet for all his moralizing, Buffett's column never deals with the moral problem at the core of the current double taxation of dividends. Money paid out to shareholders as dividends was the shareholder's money all along -- money that has already been taxed when the corporation pays its corporate income tax. The payment of a dividend is nothing but a transfer of someone's already taxed money to himself.
If Buffett wants to make the judgment that the rich should pay more for government services to be enjoyed by all, then let him do so, and let him suggest optimal ways that such taxes should be levied in the future. Hey, in the meantime, Warren Buffet should feel free do a little leading by example by personally paying more taxes voluntarily. But even if he's not quite that sincere, if Buffet has any moral convictions about such things he should at least refrain from the hypocrisy of making his arguments using the kind of accounting tricks he damns others for.
What about the people who receive most of their income in the form of stocks or capital gains? Should hedge fund managers get a tax break for investing other people's money? There has to be a way to allow those with real capital gains to be taxed at a different % compared to those who receive it as salary.
Read my response to lordbalfor. Buffet is using creative math to make his claims and avoiding facts to create an issue. There is a lot of misinformation on the issue. This is VERY common in the "rich are getting away with money" claims. The "rich" pay your taxes. the top 10% earners pay 66% of the taxes. The bottom 50% earners pay roughly 3.2% taxes. They are not only paying "more" taxes than you and I, but they are paying a LOT more than you and I.
I am not anywhere near 81K, but make much, much more. The obvious issue is the government unashamedly taking close to 50% of my hard earned money. So that those who binge off the dole can have their paid for "goodies" at my expense. Noone knows the frustration and unfairness of this until they make a larger income. I live well below my means, save what I have left after the IRS gets theirs, invest what I can, etc. I don't have a big fancy house or new car, no luxury extras such as boats, RVs, etc. So when I see medicaid enrollees with gold chains around their neck and big new cars, I get a little incensed. Don't get me started on what the illegals cost me....
We bought our house in 2001 , for £128 000 ( it's now worth over £250 000 according to a recent evaluation). House prices are absolutely ludicrous here , I agree and one hell of a big problem in the UK. It's a very pretty but small Edwardian stone cottage ( 2 bedrooms ) with lots of period features and character so I don't feel too hard done by.
I do feel sorry for kids nowadays as trying to get on the housing ladder is very hard indeed. We don't need a $400 000 house though, there's only the 2 of us and it wouldn't be very sustainable.
We may not be rich but we are pretty comfortable and do not feel deprived in any way. We have at least 3 foreign vacations a year ( including a month long one) , eat out a lot and go to the theatre, concerts, movies etc.. very regularly.
We pay more in taxes than we would in the US and I am completely fine with that.
I don't think anyone's trying to persuade you to move here.
No wonder you're living OK...with a 128k mortgage you'll be OK on 45kGBP per year. Not great....just OK. We had a 110k mortgage and almost 60kGBP combined income and it was tough to save. I did manage to save 10kGBP prior to leaving the UK but it took about 3 years.
I think the market in the UK is headed downwards...we sold the house we bought for 110k in 2001 for 180k in spring 2007. We had to reduce the asking price by 10k and most houses on the estate took 6-9 months to sell with a few exceptions. There's one house there that has been for sale for about 15 months now; I occasionally check up on it on rightmove.co.uk. They refuse to lower the price; it's hilarious.
Personally, I much prefer living in the United States. I'm American and I never felt welcome in the UK and I could not get accustomed to the lower standard of living.
The "rich" pay your taxes. the top 10% earners pay 66% of the taxes. The bottom 50% earners pay roughly 3.2% taxes. They are not only paying "more" taxes than you and I, but they are paying a LOT more than you and I.
The top 10% earners pay 66% of the the taxes.
DUH!
That because they own the vast bulk of the wealth - they SHOULD be paying the vast bulk of the taxes as they own the vast bulk of the wealth. Look at the stats for wealth distribution and you find info such as this "As of 2001, the top 1% of households (the upper class) owned 33.4% of all privately held wealth, and the next 19% (the managerial, professional, and small business stratum) had 51%, which means that just 20% of the people owned a remarkable 84%, leaving only 16% of the wealth for the bottom 80% (wage and salary workers). In terms of financial wealth, the top 1% of households had an even greater share: 39.7%."
That because they own the vast bulk of the wealth - they SHOULD be paying the vast bulk of the taxes as they own the vast bulk of the wealth. Look at the stats for wealth distribution and you find info such as this "As of 2001, the top 1% of households (the upper class) owned 33.4% of all privately held wealth, and the next 19% (the managerial, professional, and small business stratum) had 51%, which means that just 20% of the people owned a remarkable 84%, leaving only 16% of the wealth for the bottom 80% (wage and salary workers). In terms of financial wealth, the top 1% of households had an even greater share: 39.7%."
We weren't talking about wealth distribution. In fact, Mr. Buffet was saying he paid the same as his secratary. How did we go from "The rich aren't paying enough taxes" to "The rich have all the wealth"?
Lets finish our other thought before we get into this area. Its a different direction and is avoiding your initial point. Which is...
Why should the rich pay more taxes when they already pay most (close to all I mean, the top 50% being I think if I remember right with wages of 160k+ as paying roughly 93%) of the taxes?
Answer that, then we can go into the "wealth distribution" claim if you like, but then that one is really a wishy washy one because it involves many factors that most people are not willing to accept, primarily the fact that they have the opportunity to get up into those higher realms if they are willing, but again that is another discussion.
The rich should pay all the tax because they have the most to loose if the society and economy collapse. This is why I favor a progressive tax that deducts three times the average income and includes all income including capital gains, lottery winnings and inheritances. Taxes are expensive but revolutions are dangerous.
I make less than 81K (a lot less) and live quite frugally. For instance my "new" car is 11 years old and was bought below market from a friend. What I do make is not going nearly as far because inflation in food and fuel are taking more than they used to. It has not been my optional expenses that have been going up but my fixed expenses. Thankfully we have a fixed rate mortgage or we would really be in trouble. Without good health insurance provided by my employer we would be bankrupt and my wife would probably be dead because we would not have been able to afford the cat scan that found her cancer.
I have invested in mutual funds not because I really wanted that risk but because just putting the money in a credit union would be giving it away because the savings interest is below actual inflation. What I would like to see is a savings account without any risk pay inflation plus 5 % compounded. I would also like the inflation calculators to go back and include food and energy costs into their calculations. This would cause “Cost of Living” adjustments to increase but that is what they are supposed to do.
If we seriously wanted to cut federal spending we would stop funding out overseas military adventures and stick to defending this country not our dubious allies.
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